Market Size Estimator

Market sizing should inform focus, not inflate slides. The goal is to estimate how much revenue exists in a realistic scope, what portion is reachable, and what share you can reasonably earn in a time frame you can manage. This tool helps you compute TAM, SAM, and SOM with either a bottom-up or top-down approach, then prints the assumptions so you can defend the numbers in a memo or a deck. Numbers without notes are hard to trust. Numbers with concise notes move planning forward.

Quick start - pick a method and stay consistent

Bottom-up starts from real customer counts and average revenue per account. It is stronger when you know your ICP and price. Top-down starts from a population and a spend per unit. It helps when you have industry spend but not exact counts. Choose one method for a project and stick with it in the same document. Mixing methods on the same page confuses readers. Add region or scope in a line - US SMB retail, EU fintech startups - so the totals have a meaningful boundary.

TAM, SAM, SOM - the three lines that matter

TAM is the yearly revenue if every qualified buyer paid average price. SAM is the portion you can reach with your current product and channels. SOM is the share you believe you can win in the next two to three years. The second and third lines are where judgment and proof live. Do not set SAM at 100 percent unless you can explain why distribution and product make the whole market reachable. Do not set SOM at a round number without a plan that connects hires, channels, and capacity to that share.

Assumptions - write them in one place

A number is harmless without the reasons. If you list 120,000 ICPs, name the source and the filters you applied. If ARPA is $1,200, say whether it is list price, realized price, or a blended cohort number. If your eligible percent is 60, explain the boundary - geography, compliance, integration fit. If the target penetration is 5 percent, show how many reps, partners, or campaigns you would need. This tool includes a notes field that summarizes the method. Paste your sources and filters right under it. Audiences trust numbers when they see how you arrived at them.

Revisiting estimates - keep them alive

As you ship, your ARPA and conversion rates will change. Update the model quarterly and write a short sentence on what moved - price change, new channel, improved onboarding. Over time, your SAM and SOM should converge with reality. When they diverge, that is not a failure; it is a signal to update plans. For a clear overview of market sizing patterns and pitfalls, the summary from McKinsey on granularity of growth is a helpful lens for staying honest about segments.

Comparison - slide-first sizing vs memo-first sizing

Bullet notes - sizing that guides decisions

• Prefer bottom-up when you have price and counts - it travels better in diligence.
• When using top-down, be explicit about eligibility filters and penetration targets.
• Write sources next to numbers so other teams can reuse the model.
• Connect SOM to staffing and channels so the share feels earned, not wished.

Real example - choosing a smaller, faster market

A team pitched a huge TAM for global healthcare. The numbers did not help them decide where to start. We ran a bottom-up model for outpatient clinics in two states with an ARPA from three pilots. TAM shrank on paper, but SAM and SOM became specific enough to shape a sales plan. The team hired two reps with local experience and hit the SOM target in nine months. The new deck was smaller and more convincing because it matched the plan.

Two quick questions before you share

• Can a reader see the source and filter behind each input without asking you for another file?
• Does SOM translate into headcount, partner count, or campaigns that the budget can actually support?

Market size gets useful when it can drive a hiring plan and a calendar. Keep your inputs simple, your notes clear, and your updates regular. With that rhythm, TAM-SAM-SOM stops being a slide and becomes a working tool for where to focus next.