1. How are you building the total market?
Bottom-up can be checked line by line and is what diligence asks for. Top-down inherits assumptions you cannot see.
How many organisations could plausibly buy this. Count them from a primary dataset, not an estimate.
Annual revenue per account. Use realised prices, not list price.
2. What narrows it to the market you can actually serve?
Each filter keeps a percentage of what came before it. Company size, geography, regulatory fit, required integrations, language — the constraints that are true today, not the ones you plan to remove.
3. What share can you win, and can you deliver it?
Be honest here — this is the number diligence challenges first.
Used to test the share target against real capacity.
Serviceable obtainable market (SOM)
$12.00M
$12,000,000 a year — 1.000% of the total market, or about 1,000 customers.
TAM — total addressable
$1.20B
$1,200,000,000
SAM — serviceable available
$240.00M
20.00% of TAM
Sales capacity
$2.88M
Below the SOM target
At the end of the projection horizon
Projected TAM
$1.51B
Projected SOM
$15.12M
Assumes the growth rate holds and your share stays constant. Both need their own evidence.
Read this alongside the answer
- The share target implies $12,000,000 of revenue, but 10 reps closing 24 deals a year can produce at most $2,880,000. The gap has to close somewhere: more reps, higher contract value, or a smaller share assumption.
- Every figure here is only as good as the account count and contract value behind it. Source the account universe from a primary dataset — Census County Business Patterns or SUSB for US firm counts by industry and size — rather than an estimate, and use your own realised contract values rather than list price.
Step-by-step solution for your numbers
Each filter gets its own line, so the path from the total market down to the number you would put in a plan is visible and challengeable at every step — which is exactly what anyone reviewing it will want.
Step 1: Build TAM from the account universe
- Formula
- TAM = addressable accounts × annual contract value
- Your numbers
- 100,000 accounts × $12,000
- Result
- $1,200,000,000 ($1.20B)
Total addressable market: annual revenue if every account in the universe bought at this price.
Step 2: Apply the filter: Companies with 50+ employees
- Formula
- remaining = previous × filter%
- Your numbers
- $1,200,000,000 × 50.00%
- Result
- $600,000,000 ($600.00M)
Step 3: Apply the filter: In our launch geography
- Formula
- remaining = previous × filter%
- Your numbers
- $600,000,000 × 40.00%
- Result
- $240,000,000 ($240.00M)
Step 4: Read off the serviceable available market
- Formula
- SAM = TAM × (all filters multiplied together)
- Your numbers
- $1,200,000,000 × 50.00% × 40.00% = $1,200,000,000 × 20.0000%
- Result
- $240,000,000 ($240.00M)
SAM is 20.00% of TAM — the part of the market this business can actually sell to and serve today.
Step 5: Apply the share you expect to win
- Formula
- SOM = SAM × obtainable share
- Your numbers
- $240,000,000 × 5.00%
- Result
- $12,000,000 ($12.00M)
SOM is 1.000% of TAM. This is the figure a plan should be built on.
Step 6: Convert SOM back into customers, as a sanity check
- Formula
- customers = SOM ÷ annual contract value
- Your numbers
- $12,000,000 ÷ $12,000
- Result
- 1,000 customers
A market size you cannot restate as a countable number of customers is not a plan.
Step 7: Test the target against sales capacity
- Formula
- capacity = reps × deals per rep per year × annual contract value
- Your numbers
- 10 × 24 × $12,000
- Result
- $2,880,000 per year
This is below the $12,000,000 the share assumption requires — the target cannot be reached with this team.
Step 8: Project the market forward
- Formula
- future value = present value × (1 + growth)^years
- Your numbers
- $1,200,000,000 × (1 + 8.00%)^3 = $1,200,000,000 × 1.259712
- Result
- TAM $1.51B · SOM $15.12M
The projection assumes today’s growth rate holds and your share stays constant. Both assumptions need their own evidence.
The formula
TAM = addressable accounts × annual contract value
SAM = TAM × filter₁ × filter₂ × … × filterₙ
SOM = SAM × obtainable share
capacity = reps × deals per rep per year × annual contract value
The first three lines are the standard funnel. The fourth is the one most market sizings omit: what the sales organisation can physically produce. When capacity sits below SOM, the share assumption is the thing that has to change.
Why bottom-up survives questioning
A market size is an argument, not a measurement, and it is only as strong as the weakest link a reader can find. That is the whole case for building it bottom-up: when TAM is a countable number of accounts multiplied by a price you actually charge, every assumption sits in the open where it can be checked, challenged and corrected.
Federal business statistics make that count genuinely obtainable rather than aspirational. County Business Patterns and the Statistics of U.S. Businesses publish establishment and firm counts by industry code and employment size class, which is precisely the shape a credible TAM needs — identify the classification code, take the count for the size bands you sell to, and the largest input to your model arrives with a citation attached rather than an estimate.
The filters are where honesty is cheapest and most valuable. Each one should be a constraint that is true today, not one you intend to remove: the size band you can support, the geography you can bill and serve, the regulatory or technical fit you actually satisfy. A model with no filters is claiming that every account on the list is reachable now, which is almost never the case and is immediately obvious to anyone reading it.
And then the part most sizings skip. SOM is a revenue promise, and revenue is closed by people. If ten reps closing two deals a month cannot produce the number your share assumption implies, the assumption is not ambitious — it is arithmetic that has not been checked. This calculator does that multiplication for you and says so plainly when the two do not meet.
Methodology and sources
This calculator implements the standard TAM/SAM/SOM funnel in both directions: bottom-up, where TAM is constructed from an account count and a contract value, and top-down, where a published market figure is taken as the starting point. Filters are applied multiplicatively in sequence, and each one appears as its own line in the worked solution so the derivation can be audited rather than trusted.
Two checks run alongside the arithmetic because they catch the errors the arithmetic cannot. SOM is converted back into a count of customers, since a market size that cannot be restated as a countable number of buyers is not a plan. And the share target is tested against stated sales capacity, which is where an otherwise tidy model most often turns out to be undeliverable.
The page embeds no market data. Both the account universe and the contract value are yours to supply, because they are the inputs that determine whether the answer means anything, and because any figure shipped inside a page begins going out of date immediately. The sources below are the primary federal datasets to take those inputs from; each links to the agency's own documentation so you read the current release rather than a copy of it.
All arithmetic runs in your browser. Nothing you enter is transmitted, stored, or logged — worth knowing, given that a market model is usually confidential.
Primary sources
U.S. Census Bureau
County Business PatternsAnnual establishment counts, employment and payroll by industry code and geography — the primary dataset for counting the account universe in a bottom-up TAM.
U.S. Census Bureau
Statistics of U.S. Businesses (SUSB)Firm and establishment counts broken out by employment size class, which is what lets a company-size filter be sourced rather than guessed.
U.S. Census Bureau
North American Industry Classification System (NAICS)The classification system every federal business dataset is keyed on. Identifying the right code is the first step in counting an addressable universe.
U.S. Census Bureau
Economic CensusBenchmark revenue by industry, collected every five years — the reference for checking a bottom-up TAM against observed industry receipts.
U.S. Bureau of Economic Analysis
GDP by IndustryValue added and gross output by industry, useful as an upper-bound sanity check: a TAM approaching an industry’s entire output is a signal the definition has drifted.
U.S. Securities and Exchange Commission
EDGAR full-text search — company filingsPublic companies disclose segment revenue and often their own market-size reasoning in 10-K filings — a way to check a contract-value assumption against audited figures.
Links go to the publishing agency, so you always read the current figure rather than a copy of it. This page embeds no agency data of its own.
Common questions
What is the difference between TAM, SAM and SOM?
TAM is the total addressable market — annual revenue if every account that could conceivably buy did. SAM is the serviceable available market: the part of TAM you can actually sell to and support today, after the constraints that genuinely apply. SOM is the serviceable obtainable market: the share of SAM you can realistically win in the planning period. TAM sets the ceiling, SAM sets the field, and SOM is the only one of the three you should build a plan on.
Should I size bottom-up or top-down?
Bottom-up whenever you can. Counting accounts and multiplying by what each pays produces a number that can be audited line by line, and every assumption is visible and challengeable. A top-down figure taken from a published report carries assumptions you cannot inspect — about scope, geography, definitions and vintage. Top-down is useful as a sanity check on a bottom-up number, and weak as a foundation.
Where do I get a credible account count?
From a primary statistical source rather than an estimate. For US businesses, County Business Patterns and the Statistics of U.S. Businesses program publish establishment and firm counts by industry code and employment size class, which is exactly the shape a bottom-up TAM needs. Identify your industry code first, then pull the count for the size bands you actually sell to.
What should I use for annual contract value?
What customers actually pay, averaged across your real mix — not list price, and not the price of your most expensive tier. If you have no customers yet, use the closest observable proxy and say so. An inflated contract value is the quietest way to double a market size, because unlike the account count nobody can check it against a public dataset.
What is a defensible market share to assume?
Much lower than most plans assume. Outside a genuine winner-take-most category, established leaders rarely hold more than a quarter of a market, and a new entrant reaching double digits in a few years is doing exceptionally well. The share assumption is the number that gets challenged first in diligence, so it is worth arriving with a reason rather than a round figure.
Why does the calculator ask about sales headcount?
Because a share target is a revenue promise, and revenue has to be closed by someone. Multiplying reps by deals per rep by contract value gives the most that team can physically produce in a year. When that figure sits below the SOM the share assumption implies, the plan is arithmetic rather than strategy — and it is far better to discover that here than in a board meeting.
Should SOM be a revenue figure or a customer count?
Both, and they should agree. Dividing SOM by contract value gives the number of customers implied. If that count is larger than your pipeline could plausibly produce, or smaller than one whole customer, the model has a problem the dollar figure alone would have concealed.
Does a bigger TAM make a better case?
Not on its own, and often the reverse. A very large TAM with no visible derivation invites the reader to discount the whole model. A smaller, fully sourced number that survives questioning is more persuasive than a headline figure that cannot be traced back to a countable population of buyers.
This page does the arithmetic. We check the numbers you put into it.
The arithmetic on this page is the easy part. The account count, the contract value and the growth rate you feed into it are research questions, and a market size is only as defensible as those three inputs. A $29 Verified Snapshot answers one business question in a short, fully cited brief — and every claim in it is checked against its own source before it ships. Others check that links work. We check that claims are true.
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These calculators are provided for general business analysis and are independent informational research — not investment, financial, legal, or tax advice. The arithmetic is standard and openly documented on this page; the assumptions you enter are yours, and the conclusions drawn from them are too.