When investors ask about your market size, they're really asking three questions: How big is the overall opportunity? How much of it can you realistically serve? And how much can you actually capture?
TAM — Total Addressable Market
This is the total market demand for your product or service. If every potential customer bought your solution, this is how much revenue you'd generate.
For example, if you're building project management software, the TAM would be the entire global project management software market — roughly $6.7 billion as of 2025.
SAM — Serviceable Available Market
This narrows your TAM to the segment you can actually reach with your business model, geography, and distribution channels. If you're focused on small teams in North America, your SAM is a subset of the total market.
Your SAM answers the question: "Of the total market, which part can I realistically sell to?"
SOM — Serviceable Obtainable Market
This is the realistic portion of your SAM that you can capture in the near term. Consider your resources, competition, and go-to-market strategy. For a new startup, this might be 1-5% of your SAM in the first few years.
How to Calculate These Numbers
There are two primary approaches:
Top-Down Analysis
- Start with industry reports from Gartner, Statista, or IBISWorld
- Apply filters for your geography, segment, and pricing tier
- Estimate your realistic capture rate
Bottom-Up Analysis
- Identify your target customer count
- Multiply by your average revenue per customer (ARPU)
- Cross-reference with competitor revenue data and growth rates
A well-researched market sizing analysis shows investors that you understand your opportunity and have realistic expectations about growth. It's one of the first things they look for in a pitch deck.
