- TAM is everyone who could buy; SAM is the part you can serve; SOM is what you can realistically win.
- Investors prefer bottom-up sizing: customers × price, with the maths shown[1].
- "We only need 1% of a huge market" is widely seen as a red flag[2].
- Use SOM to connect the market to your plan and your ask.
The three numbers
| Term | Plain meaning | What investors read from it |
|---|---|---|
| TAM, total addressable market | Everyone who could ever buy this | How big the vision could get |
| SAM, serviceable available market | The part you can serve with your product, channels and geography | Whether the product fits a real segment |
| SOM, serviceable obtainable market | What you can realistically win in the next few years | Whether your plan is grounded |
Bottom up beats top down
Top down starts from an industry report: "the healthcare software market is $X billion" and takes a slice. It is quick and easy to inflate. Bottom up starts from customers you can count: the number of target customers multiplied by what each pays per year. Carta describes bottom-up sizing as more time-consuming but usually more accurate[1], and investor guides commonly warn against claiming a small percentage of a huge market[2].
A worked example
A fictional company sells appointment software to clinics for ₹60,000 a year.
- SAM: count the clinics in the six cities you can sell to today, say 8,500, × ₹60,000 = about ₹51 crore a year.
- SOM: with your sales team and channels, you can win about 1,000 clinics in three years = ₹6 crore a year.
- TAM: all clinics in India × the same price, as context for how far the business could go.
Each number shows its maths, and the SOM links directly to the plan: how many sales people, how many clinics a month, and the money you are raising to get there.
Common mistakes
- Quoting the whole industry as your market.
- Mixing currencies or years without saying so.
- No source for the customer count.
- A SOM that does not match the revenue plan elsewhere in the deck.
For sector-specific market sizing, such as farmers by crop for agritech or transactions by city for marketplaces, see our pitch deck guides by industry.