TAM SAM SOM Calculator: Top-Down and Bottom-Up Market Sizing

How to use this TAM SAM SOM calculator

This TAM SAM SOM calculator gives you your market size in three numbers and lets you compare the two methods founders use in business plans. It takes about as long as filling in four boxes.

1. Pick a method

   Done

   Go top-down if you start from the whole market and apply percentages. Go bottom-up if you can count the customers you can reach today (directories, your CRM, your service area). If you have data for both, run both.

2. Add what you sell and the time frame

   Done

   SOM is what you can win within a set period, usually three to five years. The pitch deck sentence uses that period word for word.

3. Fill in the four inputs

   Done

   Customers, annual spend per customer and the two percentages (or the customers you can reach, if you go bottom-up). The figures, circles and sentence update as you type.

4. Take your results with you

   Done

   Copy the pitch sentence, the plain-text summary or the AI prompt that asks ChatGPT or Gemini to stress-test every assumption.

How to calculate TAM SAM SOM

Picture three circles, one inside the other. In the calculator, each circle's area is proportional to its figure, so you can see at a glance how much your market shrinks at each step.

Top-down
TAM = potential customers × annual spend per customer
SAM = TAM × % of the market you can serve
SOM = SAM × % you can win in your time frame

Bottom-up
TAM = possible customers × annual revenue per customer
SAM = customers you can reach × annual revenue per customer
SOM = customers you can reach × % you can win × annual revenue per customer

If someone asks about TAM vs SAM vs SOM, the short answer is: TAM is what exists, SAM is what you can serve and SOM is what you'll actually get.

TAM SAM SOM example with real math

This is the example the calculator loads: an inventory app for independent coffee shops, sized top-down.

Step	Math	Result
TAM	38,000 coffee shops × $1,200 a year	$45.6M
SAM	$45.6M × 25% (the regions you cover)	$11.4M
SOM	$11.4M × 4% within 5 years	$456K
Customers	$456K ÷ $1,200	about 380

The numbers are illustrative. Before they go in a deck, count the businesses in your industry with the Census Bureau's County Business Patterns or a trade directory, and use your real price.

TAM SAM SOM examples for ecommerce, SaaS and local shops

These three cases are made up, with round numbers for practice. Swap in your own.

Case	TAM	SAM	SOM
Specialty coffee online (top-down)	1M buyers × $90 = $90M	20% buy from small shops = $18M	1% in 3 years = $180,000
Invoicing software for freelancers (top-down)	2M freelancers × $240 = $480M	25% with no invoicing tool = $120M	0.5% in 3 years = $600,000
Neighborhood gym (bottom-up)	60,000 residents × $480 = $28.8M	15,000 within a 10-minute walk = $7.2M	600 members × $480 = $288,000

Look at the gym: its SOM doesn’t come from a percentage but from counting how many members fit in the space. That’s the difference between a number you can defend and one that just decorates.

Market sizing: how to tell if the market is big enough

Market sizing is useless until you compare it with your goal. Do it in three steps:

1. Turn your goal into customers: revenue you need ÷ yearly price. With $150,000 and a $1,200 yearly price, you need 125 customers.
2. Compare that with your SOM in customers. In the coffee-shop example above, the SOM is about 380. Needing 125 means winning about a third of it, which is a lot.
3. Check whether the market is growing. A growing market helps you get there. A shrinking one means taking customers from someone else.

As a rule of thumb, if your goal needs more than a quarter of the SOM, the market is too small or the goal is too big. Raise the price, widen the area you serve or lower the goal before you start.

Top-down vs. bottom-up: which one investors trust

Bottom-up market sizing wins because anyone can check it. “If we get 1% of a $2 billion market” says nothing about how you'll sell. “There are 7,500 coffee shops our sales team can reach, and each pays $1,200 a year” can be checked line by line. In its guide to Demo Day presentations, Y Combinator asks for exactly that: price times the number of possible customers, not vague percentages of huge markets.

That's why sizing works best when you start from the customer. If you're not sure who you're counting yet, define them first with the buyer persona template. To check whether your SOM holds up against competitors, run a quick SWOT analysis. For more planning guides and tools, head to marketing strategy.

Frequently asked questions about TAM, SAM and SOM

01

What is TAM, SAM and SOM?

They're three numbers that size your market from biggest to smallest. TAM, the total addressable market, is everything spent each year on what you sell. SAM, the serviceable addressable market, is the slice you can actually serve with your product, region and channels. SOM, the serviceable obtainable market, is the share you can realistically win in the next few years. Together they tell an investor, a lender or your cofounder whether the opportunity is worth chasing.

02

How to differentiate between TAM, SAM, and SOM?

Ask one question for each. TAM: if every possible customer bought from us, how much would we make? SAM: of those, which ones can we reach today with our product, region, language and sales channels? SOM: of the ones we can reach, how many will we really win in three to five years, given our team, budget and competitors? If a number can't answer its question, it belongs to a different circle.

03

What should a TAM SAM SOM slide include?

Three nested circles with one figure each, the time frame for your SOM and one short line on how you got there, ideally bottom-up. Add the source of every input in small print, like a government count of businesses or an industry report. Investors skim that slide fast, so skip the paragraph. If you need detail, keep the full calculation in the appendix and be ready to walk through it.

04

Is there a free TAM SAM SOM template?

This page works as one: no sign-up, nothing to download, and your numbers never leave your browser. If you want it in a spreadsheet, hit “Copy as text,” paste it into Excel or Google Sheets and rebuild the three formulas from the section above. Then copy the sheet twice to compare a conservative, a base and an optimistic scenario by changing only the percentages.