Article · 9 min read

How to calculate your startup's TAM, SAM and SOM

Marjorie Radlo-Zandi · TechCrunch Free Beginner

It walks one worked example (a specialty foods company) all the way down the funnel and, crucially, builds SOM bottom-up from unit economics: 75 stores in year one, 200 in year two, 500 in year three, times product sales per store. That is exactly the customers-times-price-times-frequency math that replaces the '1% of TAM' hand-wave, and it shows SOM as a three-year ramp so you can present it as your hero number.

  • Build SOM bottom-up from a concrete customer count and price, not as a percentage carved off a giant TAM
  • Model SOM as a multi-year ramp (year one, two, three) so the number reads as a plan, not a wish
  • TAM belongs on the slide as context above SOM, not as the headline you lead with
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The question it answers

  1. How do I build a market size slide that is credible instead of the fantasy 'we just need 1% of a billion-dollar market'?

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