The three numbers
Market sizing reports always cite three nested numbers: TAM, SAM, and SOM. They sound similar; they answer very different questions.
- **TAM (Total Addressable Market)** — the global revenue your product could earn if every theoretically possible buyer bought from you and only you. It is the largest, vaguest number.
- **SAM (Serviceable Addressable Market)** — the slice of TAM you can actually reach given your geography, language, regulatory posture, and distribution.
- **SOM (Serviceable Obtainable Market)** — the slice of SAM you can realistically capture in the next 3–5 years.
How to compute each one (without lying)
The two honest methods are top-down and bottom-up. **Top-down** starts with a published industry report ("the global X market is $42B"), then applies a defensible filter ("we serve mid-market companies in North America, ~14% of buyers, so SAM ≈ $5.9B"). **Bottom-up** starts with a unit ("there are 80,000 mid-market dental practices in the US, average willingness-to-pay $4,800/year, so SAM ≈ $384M").
Bottom-up is almost always more credible. Top-down anchored on a single market-research report is the easiest way to lose an investor's trust.
The number investors actually want
Sophisticated investors do not actually care about your TAM. They care about (1) your SOM in the next 3 years and (2) the path from SOM to a much larger SAM. A $50M SOM with a credible expansion story beats a $50B TAM with a hand-wave on capture rate every time.
How to compute yours
Use the [TAM Calculator](/free-tools/tam-calculator) for a structured top-down model and the [Market Size Calculator](/free-tools/market-size-calculator) for a full TAM/SAM/SOM walk-through. Pair the result with the [Revenue Projector](/free-tools/revenue-calculator) to translate SOM into a believable Year-3 revenue number.
For a wider lens on the validation work that should come *before* you size the market, see [How to validate a startup idea in 7 days](/blog/validate-startup-idea-in-7-days).