How to estimate market size (TAM, SAM, SOM)

The three layers

• TAM (total addressable market): everyone who could ever buy this category of product.
• SAM (serviceable available market): the slice you can actually reach with your model, geography, and language.
• SOM (serviceable obtainable market): the share you can realistically win in the first few years.

Top-down: start from published data

Begin with authoritative sources: US Census Bureau business counts, national statistics offices, and industry association reports. Take the published category size, then narrow it by the filters that define your customer — company size, region, budget. Every filter should have a source; a chain of unsourced percentages is a guess wearing a suit.

Bottom-up: count real customers

Count how many target customers exist (business registries, platform user counts, professional directories) and multiply by a realistic annual price. If top-down and bottom-up disagree by more than an order of magnitude, one of your assumptions is wrong — find it before anyone else does.

Demand signals: is the market growing?

Size is a snapshot; trend is the trajectory. Search-volume trends, job postings in the category, and funding activity all signal whether demand is rising. A small but fast-growing market can beat a large stagnant one.

Cite everything

A market-size number without a source is marketing. Keep the citation next to every figure so you can re-check it six months later. Marketproof's evaluation reports attach sources to every market statistic for exactly this reason.

For a full worked example of the three layers, read TAM, SAM, SOM explained.