Market Sizing Analysis
Comprehensive market sizing methodologies for calculating Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) for startup opportunities.
Overview
Market sizing provides the foundation for startup strategy, fundraising, and business planning. Calculate market opportunity using three complementary methodologies: top-down (industry reports), bottom-up (customer segment calculations), and value theory (willingness to pay).
Core Concepts
The Three-Tier Market Framework
TAM (Total Addressable Market)
- Total revenue opportunity if achieving 100% market share
- Defines the universe of potential customers
- Used for long-term vision and market validation
- Example: All email marketing software revenue globally
SAM (Serviceable Available Market)
- Portion of TAM targetable with current product/service
- Accounts for geographic, segment, or capability constraints
- Represents realistic addressable opportunity
- Example: AI-powered email marketing for e-commerce in North America
SOM (Serviceable Obtainable Market)
- Realistic market share achievable in 3-5 years
- Accounts for competition, resources, and market dynamics
- Used for financial projections and fundraising