What is TAM, SAM, SOM?

TAM, SAM and SOM size your market in three steps. TAM is the total revenue if every possible customer bought. SAM is the part you can reach today. SOM is the part you can realistically win in the next one to two years.

Formula

Market size = number of customers that fit your ICP × annual revenue per customer

Example

A booking tool for independent physiotherapy clinics. TAM: 40,000 clinics in the US × $1,200 a year = $48M. SAM: the 10,000 clinics in states you can sell to today = $12M. SOM: 300 clinics in two years = $360,000.

Why it matters for early-stage founders

Investors use market size to judge whether the business can grow large enough. You use it to check whether your ICP is big enough to build on, and whether your sales plan is realistic.

The common mistake

Sizing top down: "the fitness market is $90B, we only need 1%". A number built from real customers multiplied by a real price is smaller, but you can defend every part of it.

Size your market from the bottom up

Section 04 of the free Market Research template builds TAM, SAM and SOM from your ICP, with a confidence level for every assumption.

Get the Market Research template

Go deeper

Read the full guideTry the calculatorIdeal customer profile

Related terms

Ideal customer profile (ICP)

Reviewed October 1, 2026