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Imagine you're in a fundraising meeting with all eyes on your pitch deck. Your market opportunity slide isn’t just a collection of numbers; it shows investors that your startup's vision is bold and achievable.

In this article, we're breaking down TAM, SAM, and SOM to help you understand the full spectrum of your market opportunity. We'll take you on a journey from the big picture to the nitty-gritty details, starting with TAM, which shows the total revenue opportunity, moving through SAM, the segment you can realistically serve, and finally landing on SOM, the slice of that market you can actually capture.

With practical tips, real-world examples, and actionable strategies, you'll learn how to translate these numbers into a compelling story for your pitch deck.

Breaking down TAM, SAM & SOM

When planning your company strategy, you first need to know exactly where your product or service stands in the market. You want to understand the full range of potential customers and the realistic segments you can target and eventually win over.

This kind of market insight helps you set clear, achievable goals and communicate your vision effectively to investors, partners, or team members.

In essence, companies break down the market into three layers:

• The broadest potential market
• The slice they can realistically reach
• The share they expect to capture.

What is Total Addressable Market - TAM?

Total Addressable Market (TAM) is basically the total revenue opportunity available if you could capture 100% of the market for your product or service. In other words, it's a way to measure the full market demand for your offering.

Imagine you're launching a new product. Your TAM is the total amount of money potential users would spend on a product like yours if every single person who could use it did. This figure helps you understand the size of the opportunity, plan business strategies, and attract investors.

What is Serviceable Available Market - SAM?

SAM stands for Serviceable Available Market. It’s the slice of the Total Addressable Market you can target with your products or services. In other words, while TAM represents the full market potential, SAM narrows that down to the customers you can reach, given your business model, geographic focus, and other practical limitations.

For example, if you're launching a new product that is only available in the UK, your TAM might include all users in Europe, but your SAM would just be those users in the UK. Understanding your SAM helps you focus your marketing and sales efforts on the segment of the market that’s truly within reach.

What is Serviceable Obtainable Market - SOM?

Think of it this way: if TAM is the total market for your product and SAM is the part you can realistically reach, SOM is the slice of that market you can actually capture. It considers things like your current resources, competition, and how well you can deliver your product or service.

For example, if you're launching a new product in Europe, your TAM might include all smartphone users, and your SAM could be the tech-savvy crowd in certain regions. But your SOM is the number of users you realistically expect to get based on your marketing, budget, and competition.

In short, SOM helps you set more practical goals by identifying the part of the market that is really up for grabs.

How do you calculate your TAM, SAM & SOM?

Calculating your TAM, SAM, and SOM is all about narrowing down your market potential from the total available opportunity to the slice you can realistically capture.

It helps you understand the full revenue possibility, refine your focus on the customers you can serve, and finally set practical targets based on your resources and competition.

How to Calculate TAM

There are three main approaches to calculating TAM, plus one additional method.

• The top-down approach takes a broad, macro view by examining high-level economic factors.
• The bottom-up method focuses on a small, localized sample and then scales those results to estimate the entire market opportunity.
• The value theory approach looks at the unique benefits—or positive externalities—that your offering provides compared to what's already available.

The top-down approach typically involves looking at industry reports, government statistics, or other high-level data to estimate the overall market potential. For instance, you might begin with the total revenue of an entire industry and then determine what percentage of that revenue might be relevant to your product or service. This gives you a big-picture view that can be helpful in the early stages of planning.

Here is an example of how TAM calculates for WeWork to help you better understand what this looks like in a real-life company.

Source: TAM, SAM, SOM Methodology - Toptal

One of the major benefits of the top-down approach is its simplicity and ease of access since a lot of the necessary data is already available from public sources.

The bottom-up method takes a more granular approach by starting with data from a small, localized area or a specific customer segment and then scaling those numbers to estimate the broader market opportunity.

Source: Market Sizing Guide - Halem Capital

This approach typically involves calculating the number of potential customers in a defined area, multiplying that by the average revenue per customer, and then extrapolating that figure to a larger geographic or demographic segment. It’s all about gathering concrete, on-the-ground data and building up your market size from real-world insights rather than broad industry estimates.

One major strength of the bottom-up method is its accuracy in reflecting actual consumer behavior and market conditions.

The value theory approach focuses on the benefits your product or service offers compared to existing options. Instead of counting potential customers or revenue, this method zeroes in on the extra value, like improved convenience, better quality, or innovative features that make your offering stand out.

How to Calculate SAM

Calculating SAM continues the bottom-up approach used to calculate TAM. Here is what you need to know: To calculate SAM, start with your TAM, which represents the total revenue opportunity if 100% of the market uses your product. Then, refine it by identifying the specific customer segments you can realistically serve, considering factors like geography, industry focus, and distribution constraints.

• Use a top-down approach by applying market share estimates (e.g., if the TAM is $10B and your target segment accounts for 30%, then SAM = $3B).
• Validate this with a bottom-up approach by estimating the number of potential customers and multiplying by the average revenue per customer (e.g., if there are 1 million potential customers each spending $3,000 annually, the SAM is $3B).
• Cross-check both methods to ensure consistency, adjusting for market accessibility and competition to get a realistic SAM estimate.

How to Calculate SOM

To calculate SOM, start with your SAM and estimate your achievable market share based on brand strength, sales capacity, and the competitive landscape.

A top-down approach applies a realistic percentage to the SAM (e.g., if your SAM is $3B and you expect to capture 5%, then SOM = $150M).

A bottom-up approach estimates the number of customers you can reach (e.g., if your company can acquire 50,000 customers at an average annual revenue of $3,000, then SOM = $150M).

How to present TAM, SAM & SOM in a pitch deck

When pitching to investors, your market opportunity slide is a make-or-break component. Investors focus on your team and the size of your market, and a clear breakdown of TAM, SAM, and SOM shows that you’ve done your homework. If you want to understand these terms from an investor’s point of view, we recommend that you read the tips and tricks that Aram Attar from The VC Factory recommends.

Additionally, here’s a visual example of how you can structure these slides in your pitch deck and some recommendations if you want to dedicate a slide for each.

Source: Calculating market size: From TAM to SOM - waveup

Slide 1: Total Addressable Market (TAM)

• Define the complete revenue opportunity available if every potential customer bought your product.
• Use high-level industry data and trusted sources to back your numbers.
• Highlight your long-term vision and scalability.

Slide 2: Serviceable Available Market (SAM)

• Narrow the focus to the specific market segment that aligns with your business model and geographic reach.
• Show that you have unique market insights that differentiate you from competitors.
• Support your claims with targeted research, customer surveys, or industry reports.

Slide 3: Serviceable Obtainable Market (SOM)

• Present the realistic market share you expect to capture within 3 to 5 years based on your go-to-market strategy.
• Outline key tactics such as direct sales, partnerships, or other channels.
• Include revenue projections and initial milestones to demonstrate your execution plan.

Tips & tricks for a perfect market sizing pitch deck

• Keep it visual: Use charts, funnel diagrams, or infographics to illustrate how you transition from TAM to SAM to SOM. Visuals help investors quickly grasp complex data without getting bogged down by text.
• Tailor your SAM to your niche: Show that you understand your market by narrowing your TAM to a well-defined segment that matches your business model and geographic reach. Investors want to see unique insights that give you a competitive edge.
• Detail your go-to-market strategy in your SOM: Clearly outline how you plan to capture your target market over the next 3 to 5 years, including key milestones and revenue projections. A realistic SOM shows that you have a practical roadmap for growth.
• Benchmark against your competitors: Show how your approach stacks up against competitors or why your target market segment is currently underserved. This comparison can help validate your projections and highlight your competitive edge.
• Get feedback: Before finalizing your slides, share them with mentors, industry experts, or trusted advisors. Their insights can help you refine your analysis, catch potential errors, and ensure that your presentation is both compelling and realistic.

Tools & resources to help you calculate market size

There are several public resources available that can help you gather the numbers you need to size up your market accurately. These sources offer a mix of global economic indicators, demographic details, and industry-specific trends that can be tailored to your market focus.

Whether targeting a regional audience or thinking globally, these resources can provide a strong foundation for your TAM analysis.

• World Bank Open Data: This platform provides global economic indicators, country profiles, and demographic data. It’s especially useful if you're looking to understand international markets or compare economic trends across countries.
• OECD Data: The Organisation for Economic Co-operation and Development offers economic and social statistics for member countries. This resource compares market trends and consumer behaviors across developed economies.
• CIA World Factbook: Delivers detailed information on the demographics, economic conditions, and political environments of nearly every country. This resource can offer unique insights into regional market conditions and help refine your TAM calculations globally.
• Eurostat: As the statistical office of the European Union, Eurostat offers detailed data on demographics, economic performance, and industry-specific trends within Europe. It’s a great resource if you're considering the European market or planning a global expansion.

Tools to help you review your pitch deck

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