Total addressable market (TAM): How to calculate your market size

The text offers an insightful exploration of the concept of Total Addressable Market (TAM), aimed at guiding entrepreneurs in accurately assessing the market potential for their products or services. It highlights the common founder pitfall of mistaking personal obsession for market demand and stresses the importance of TAM as a tool for grounding such assumptions in reality. TAM is defined as the revenue opportunity available if a product captured 100% of its market, serving as a ceiling for growth projections. The guide elaborates on the differences between TAM, Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM), and provides methods to calculate TAM, such as bottom-up, top-down, and value theory approaches. It warns against common mistakes like overestimating market size and adoption speed, emphasizing the need for evidence-based assumptions. The text also outlines practical strategies for building robust TAM projections, including market surveys and competitive analysis, and introduces Zapier as a tool to help manage data and streamline operations to better capture the market.

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