Every investor deck and go-to-market plan needs a market size — and most founders either pull a giant number from a research report or freeze up entirely. The three-layer TAM/SAM/SOM model fixes that by moving from “the whole market” down to “what you can realistically win.”
The three numbers
TAM — Total Addressable Market
Everyone who could theoretically buy a product like yours, worldwide. It’s the ceiling — big, aspirational, and mostly out of reach for now. Example: all B2B companies that do any outbound sales.
SAM — Serviceable Addressable Market
The slice of TAM you can actually serve given your product, pricing, geography, and language today. Example: English-speaking B2B SaaS and agencies in your regions who buy lead data.
SOM — Serviceable Obtainable Market
The realistic share of SAM you can capture in the next year or two, given your reach, competition, and capacity. This is the number that should drive your actual plan. Example: the few thousand of those companies you can plausibly reach and convert this year.
Top-down vs. bottom-up
Top-down starts with a big industry figure and carves off percentages. It’s fast but flimsy — the assumptions are usually hand-wavy, and investors know it. Bottom-up builds from countable units: number of target companies × how many buyers per company × what each pays. It’s more work and far more credible, because every input is defensible.
A worked bottom-up example
Say you sell a $1,200/year tool to RevOps leaders at mid-market B2B SaaS companies:
- Target companies that fit the profile: ~40,000
- Buyers per company: ~1 (the RevOps lead)
- Annual contract value: $1,200
SAM ≈ 40,000 × $1,200 = $48M/year. If you can realistically reach and convert 3% in year one, SOM ≈ $1.44M. Now you have a number you can actually defend, and a target you can actually plan against.
Where the “number of companies” comes from
The hardest input in a bottom-up model is that first count — how many companies genuinely match your profile. That’s exactly what a list-size estimator is for: filter by industry, size, and geography and get a grounded count instead of a guess.
Get your “number of target companies” in seconds
Use the free List-Size Estimator to ground your SAM and SOM in a real count — the input every bottom-up model needs.
Written by the Verisignal team. Once you’ve sized the market, Verisignal helps you reach it with verified, ICP-matched contacts. Get a list →