TAM SAM SOM Calculator
TAM is context; SOM is the plan.
TAM is context; SOM is the plan. A large total addressable market proves the category exists.
Serviceable obtainable market
$8,640,000
$288,000,000 serviceable
TAM is a context number and SOM is a plan number. A large TAM proves the category exists; only the obtainable figure and the growth rate needed to reach it say anything about whether the business can get there.
How the TAM SAM SOM Calculator works
A large total addressable market proves the category exists. Only the obtainable figure and the growth rate needed to reach it say anything about whether this business can get there, which is why investors ask for the third number, not the first.
Also known as: market size calculator · total addressable market · TAM SAM SOM breakdown
The three circles
Total addressable market is everyone who could conceivably buy the category. Serviceable addressable market is the portion you could reach given your product, geography and channels. Serviceable obtainable market is the portion you could realistically win.
The nesting matters. SOM is a subset of SAM, which is a subset of TAM, and each step down should be justified by a specific constraint rather than by a percentage pulled from nowhere.
The most common error is presenting a large TAM and treating it as the opportunity. A £4 billion market in which you might win £200,000 is a £200,000 opportunity, and the £4 billion figure adds nothing except an impression.
Top down and bottom up
Top-down sizing starts with an industry figure and applies percentages. It is quick, it produces large numbers, and the percentages are usually assertions.
Bottom-up starts from units: how many customers exist, how often they buy, at what price. It is more work, it produces smaller numbers, and every step can be questioned.
Doing both and comparing is the discipline that catches errors. When the two approaches differ by an order of magnitude, one of them contains a bad assumption, and finding it is more informative than either number.
Where the estimates break
Industry reports are the usual source for TAM and their definitions rarely match yours. A report on the home fragrance market includes categories you do not sell and channels you cannot access.
The percentages applied at each step are where most of the error accumulates. Assuming you can address 10% of a market, and win 5% of that, produces a number entirely determined by two guesses.
Which is why the constraints should be named rather than expressed as percentages. Reducing TAM to SAM because you only ship to the UK and only serve one price segment is a defensible narrowing; reducing it by 90% because that seems reasonable is not.
What it is actually for
Market sizing is mostly used to justify a decision that has already been made, which is why the numbers are so often flattering.
The honest uses are narrower and real: deciding whether a market is large enough to be worth entering, comparing two opportunities, and identifying whether growth will be constrained by market size rather than by execution.
That last one matters for small businesses in niches. A business approaching a meaningful share of its serviceable market will find growth harder regardless of what it does, and knowing that in advance changes the plan from working harder to broadening the market.
Sizing a niche
For a small ecommerce business the useful version is bottom-up and specific: search volume for the relevant terms, the share of that traffic that could be captured, and a conversion rate.
Keyword volume gives a floor on demand, which is real data rather than an estimate. Marketplace sales estimates for competing products give another angle. Both are imperfect and both are grounded in observable behaviour.
The output is a realistic revenue ceiling for the niche as currently defined, which is the number that matters. A niche with a £150,000 ceiling is a viable side business and not a viable full-time one, and establishing that before committing is worth considerably more than a large TAM figure.
Where to go next
The TAM SAM SOM question rarely arrives on its own. These are the ones that usually come with it:
- Market Share Calculator — Growth that matches the market is the tide.
- Sales Growth Target Calculator — Retention and acquisition are substitutes here.
- Revenue Projection Calculator — Three inputs that multiply.
- Etsy Fee Calculator — Every Etsy fee on one sale, itemised.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
What do TAM, SAM and SOM mean?
Total addressable market is everyone who could ever buy. Serviceable available market is the portion you could reach with your model. Serviceable obtainable market is the share you can realistically win.
How do I estimate TAM?
Top down from industry data, or bottom up from population, penetration and average spend. Bottom up is slower and far more defensible.
Why does anyone care about TAM?
It sets a ceiling on the opportunity. A business with a £4m TAM cannot become a £10m business, however well it executes, and that is genuinely useful to know early.
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