Article · ~12 min read

TAM, SAM & SOM: What Do They Mean & How Do You Calculate Them?

Clifford Chi · HubSpot Blog Free Beginner

This lays out both the top-down (start from a big industry number) and bottom-up (build up from your own price times likely customers) ways to size a market, with formulas and a worked example. The bottom-up method is the one you can actually run over a weekend with public numbers and honest assumptions, no paid report needed. Use it to reach a rough first estimate you can defend, then keep refining as you learn.

  • Bottom-up sizing (customers you can realistically reach times your price) is more defensible for an early founder than a scary top-down billion-dollar number.
  • Free public inputs get you far: company 10-K filings, government statistics, and competitor customer counts stand in for paid reports.
  • Run both top-down and bottom-up and see if they roughly agree; a wide gap means one of your assumptions is off.
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The question it answers

  1. What are TAM, SAM, and SOM and how do I actually calculate them?

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