Market Sizing
Market Sizing answers “how much revenue could this product generate?” — at three levels: the theoretical maximum (TAM), the realistically reachable subset (SAM), and the share you can capture in a defined time horizon (SOM).
Why this section exists
Section titled “Why this section exists”Sizing is where most early-stage plans either inflate (every founder’s TAM is “huge”) or deflate (overlooking adjacent segments that should obviously be in SAM). The TAM/SAM/SOM framework gives a shared vocabulary for sizing at three levels of zoom — TAM for narrative, SAM for ICP-grounded reality, SOM for the year-1-to-year-3 plan you actually have to execute.
The single most important discipline in this section: prefer bottom-up sizing over top-down, especially for early-stage products. Bottom-up forces honesty about ICP, ACV, and reachable accounts; top-down lets you skip those decisions and ends up indistinguishable from wishful thinking.
How to use this section
Section titled “How to use this section”The single leaf on this page — TAM / SAM / SOM — gives definitions, both methods (top-down + bottom-up), a worked calculation, sanity checks, and an example. It’s the only sizing framework most early-stage teams need.
Re-run it annually, or any time the ICP materially shifts.
- TAM / SAM / SOM — definitions, top-down vs bottom-up, worked calculation, sanity checks.
See also
Section titled “See also”- Strategy: ICP — SAM is the ICP, sized in dollars.
- Strategy: Pricing & Packaging — ACV is the multiplier in every bottom-up sizing calculation.
- Workbook → Targets baseline — where SOM grounds the year-1 revenue target.
- Trends & Demand — TAM growth rate is the macro form of trends data.