TAM, SAM, SOM: the market size number nobody checks
The slide is in every presentation. Three circles, a big number on the outside, a smaller one inside and a modest little piece in the centre labelled "our target". It has been living in decks for fifteen years, and practically nobody has ever asked where the outer number came from.
I'll tell you where from: from the headline of a paid report found in the first ten seconds of googling, published by people who make a living selling that report for four thousand dollars.
Until one question gets asked, that is decoration
The question is this: "what is the person who's going to pay you paying for right now?"
If the market size was calculated top down - take the industry figure and multiply it by a percentage that looks reasonable - the answer falls apart instantly. You are defending a number you didn't build, from a study you didn't read, about a market that isn't quite yours.
Bottom up market sizing survives that question. It's slower, uglier and it holds: how many people have that problem, how many of them you actually reach with the channels you can buy, and how much they pay right now for the thing they use instead of you.
TAM, SAM, SOM in plain language
- TAM, the total addressable market: everybody who could theoretically have that problem. Useful as context, useless as a target.
- SAM, the serviceable available market: the piece you can actually serve - your country, your segment, your language, your price level.
- SOM: what you can realistically take in the next 12-18 months with your channels and your budget.
If there is no sharp drop between those three numbers, you didn't calculate the market size: you did the arithmetic of wishes. The short definitions are in the glossary, in case you want them to hand.
How to calculate TAM without fooling yourself
The version that takes an evening and not a quarter:
- Count the demand you can see. Search volumes, community sizes, the number of reviews on competing products, app installs. Real signals, not "the industry is worth X billion".
- Put the price against reality. What the alternatives charge and what people actually pay - including the free thing they use instead of paying.
- Cut by reachability. How many of them do you reach with a channel you can afford? That cut is usually brutal, and the whole point is in it.
- Cross-check against a competitor. If the leader does X in revenue with their traffic, your piece has to look sensible next to that.
- Write the assumption next to every figure. Every number has either a source or an honestly flagged guess. Anything unsigned counts as invented by default.
When that number really matters
In most presentations market size is decoration. It becomes a load-bearing structure in exactly two cases: when you're choosing between markets and when you're deciding whether to enter at all. That's when the market opportunity stops being a slide and turns into a decision about money, and a wrong figure costs a quarter of runway.
Nobody skips market sizing at the start out of laziness. The correct version - six weeks, an agency and a five-figure invoice - is priced, by construction, for whoever already has the money. That is the real reason founders copy the number off somebody else's chart: not laziness, arithmetic.
How to do it in hours and not weeks
The product was made for exactly that gap. One report closes demand, competitors, audience and channels with links to the sources, and that is enough to calculate the market bottom up and defend the calculation. If the decision is about one specific country, geo research digs a level deeper: local demand, local competitors, local channels, in the local language.
Neither of them replaces your head. Both of them replace the six weeks you don't have.
Conclusion
A market size you cannot defend is a decoration you pay for with your reputation. Assemble it from the demand you can see, cut it by reachability and write down every assumption. And then, when somebody finally asks where the figure comes from, you will have something to answer.
