Market Sizing Template (TAM/SAM/SOM)

TAM (Total Addressable Market) is the full revenue opportunity if you had 100% market share. SAM (Serviceable Addressable Market) is the portion of TAM you can realistically reach with your current product and go-to-market model. SOM (Serviceable Obtainable Market) is what you can capture in a specific timeframe (typically 3 years). The [TAM Calculator](/tools/tam-calculator) can help you compute all three.

Use both. Top-down estimates start with industry data and filter down. Bottom-up estimates count potential customers and multiply by price. Neither method alone is reliable. If your top-down and bottom-up estimates diverge by more than 3x, at least one set of assumptions is wrong. Reconciling the gap is where the real learning happens.

Build a bottom-up estimate from first principles. Count potential customers using LinkedIn, industry associations, government census data, or startup databases. Multiply by your expected price point. For emerging categories, you can also size adjacent markets and estimate what percentage of spending will shift to the new category. The [Product Strategy Handbook](/strategy-guide) covers sizing for emerging markets in depth.

Directionally correct is sufficient for strategic decisions. You need to know if the market is $50M, $500M, or $5B. The difference between $430M and $480M rarely changes a strategic decision. Focus on getting the order of magnitude right and documenting your assumptions so others can challenge specific inputs rather than the methodology. Using a [prioritization framework](/frameworks/rice-framework) alongside sizing helps rank opportunities relative to each other.

Revisit sizing when your pricing model changes, you enter a new geographic market, the competitive field shifts (new entrants or exits), or your customer segment definition evolves. Annual reviews are a good default. If a high-sensitivity assumption changes (e.g., your ACV doubles after a pricing change), update the SOM immediately. ---