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TAM, SAM and SOM: your startup’s market size

Calculate the total market, the market your model can reach and the share you can realistically win, bottom-up (customers × price), and check whether your sales team can get there in time.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Bottom-up market

Example: practice management software for medical clinics in one country.

SAM excludes customers you cannot reach: other regions, company sizes or segments your product or sales channel does not serve.

Sales capacity
Top-down check (optional)

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—SOM: annual revenue within reach in 5 years
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From total market to reachable share

Circle areas are proportional to each market’s value. Circles that would be too small are drawn at a minimum size.

Can the sales team reach the SOM?

Active customers year by year from sales capacity, net of churn, compared with the SOM target.

Tap the chart to see the values.

Summary and projection

Next step

Take this page’s results to another calculator with the fields already filled in.

Unit economics per customer →

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

TAM = customers with the problem × annual price; SAM = TAM × serviceable share; SOM = SAM × realistic share
New customers in the year = average salespeople in the year × deals per month × 12
Active customers = previous year’s active × (1 − churn) + new

Assumptions and limits

  • Educational simulation. Investors prefer the bottom-up estimate; the top-down figure from reports only checks the order of magnitude.
  • Hires are spread over the year (half a year on average); productivity and churn are constant.
  • Market estimates are hypotheses: document the source of every number before showing it to investors.

Official sources and references

Frequently asked questions

What are TAM, SAM and SOM?

TAM is the total market for the problem; SAM is the part your model and region can serve; SOM is the slice you can realistically win in a few years.

How do I calculate TAM?

Bottom-up: the number of customers who have the problem multiplied by the annual revenue per customer.

How do I read the default example?

With 120,000 clinics at $3,600 a year, TAM is $432 million and SAM, with 35% serviceable, is $151.2 million. A 5% share gives a SOM of $7.56 million a year, about 2,100 customers. The planned sales team reaches that number in year 4.

What is the difference between top-down and bottom-up?

Bottom-up starts from customers × price and shows where each number comes from; top-down starts from market reports. Investors prefer bottom-up and use top-down to check the order of magnitude.

How big a market do investors expect?

Venture capital funds usually look for a SAM in the hundreds of millions of dollars or more, because they need companies that can grow very large.

Where do I get the customer count and price?

Customer counts come from public business registries, census data, trade associations or purchased lists, filtered for the profile that has the problem. The price is what you charge or plan to charge per year, checked against competitors. Write down the source of each number.

What are the limits of this math?

TAM, SAM and SOM are hypotheses, not forecasts. The sales projection assumes constant productivity per salesperson and fixed churn, with no marketing, referrals or partnerships. Use the result to discuss assumptions with co-founders, mentors and investors.

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TAM, SAM and SOM: how to size your market

TAM, SAM and SOM are three measures of a startup’s market, from the broadest to the most realistic. Investors ask for them to judge whether the company can become big enough to justify the investment.

The three measures

  • TAM (total addressable market): every customer with the problem × annual revenue per customer.
  • SAM (serviceable addressable market): the part of the TAM your model, channel and region can serve.
  • SOM (serviceable obtainable market): the slice of the SAM you can realistically win in a few years.

A bottom-up example

In the calculator’s example, practice management software for 120,000 clinics at $3,600 a year has a TAM of $432 million. If the model can serve 35% of them, the SAM is $151.2 million. A 5% share of the SAM in 5 years gives a SOM of $7.56 million a year, about 2,100 customers.

The example uses the calculator’s default values; replace them with your own.

Bottom-up or top-down

The bottom-up estimate (customers × price) is what investors prefer, because it shows where every number comes from. The top-down figure, taken from market reports, is useful to check the order of magnitude. If the two are far apart, revisit your assumptions.

The SOM must fit your sales capacity

A SOM of 2,100 customers requires a team able to close those deals in time. The calculator projects active customers year by year from your sales capacity, net of churn, and shows whether the target is reachable or how many salespeople it would take.

What investors look for

Venture capital funds usually look for serviceable markets of hundreds of millions of dollars or more, because they need companies that can grow very large. Smaller markets can still support great businesses that are better suited to other kinds of financing.