Market
~5 minutesMarket Sizing Worksheet
= 3.000.000 ₫
TAM / SAM / SOM (bottom-up)
100% of TAM
40% of TAM
4,0% of TAM
How this tool helps and the terms you need to know
When to use this tool
- When preparing data for capital calling documents.
- When you need a quick estimate before discussions with investors.
- When reviewing the revenue plan: if the revenue target exceeds the estimated SOM, the plan needs revisiting.
Basic calculation
TAM = Total potential customers × Average value per customer per year SAM = TAM × Share of the market the business can genuinely reach SOM = SAM × Share the business expects to win
Bottom-up means starting from two countable figures: how many customers fit the product, and how much each spends in a year. Multiplying the two gives TAM, the full opportunity if every customer could be served. Then narrow it down: SAM is the portion of TAM that your current business model, distribution channels and licences allow you to reach; SOM is the portion of SAM you expect to actually win over the next few years, based on sales capacity and the competitive landscape. The more these three figures narrow, the more credible they are, because they show you understand your own limits.
Example: Suppose the target area has 200,000 business households that fit the product, each spending an average of VND 3 million per year. TAM is VND 600 billion per year. Since only the segment already using digital payment infrastructure can be served today, roughly 40%, SAM is VND 240 billion per year. If the business wins 10% of SAM over the next three years, SOM is VND 24 billion per year.
Terms used in this tool
- TAM – Total Addressable MarketTotal Addressable Market
- All the revenue obtainable if every customer with a need used the product, disregarding limits of capacity or competition. It is the upper bound of the opportunity.
- SAM – Serviceable Available MarketServiceable Available Market
- The portion of TAM the business can genuinely reach with its current product, distribution channels, geography and regulatory position. Whatever is excluded should come with a clear explanation.
- SOM – Serviceable Obtainable MarketServiceable Obtainable Market
- The portion of SAM the business expects to capture within a defined period, usually three to five years. This is the figure tied directly to the revenue plan.
- Bottom-up sizingBottom-up sizing
- Building the market size by multiplying customer numbers by value per customer, working up from actual operating data. Investors prefer this approach because each assumption can be verified.
- Top-down sizingTop-down sizing
- Taking the whole industry's size from a market report and multiplying by an assumed percentage. This approach usually draws scepticism because the percentage is chosen arbitrarily and says nothing about how the business would win customers.
- Average revenue per customerAverage revenue per customer
- The average amount one customer pays over a year. It should come from actual sales data or the current price list, accompanied by assumptions about retention.
How to read the results
SOM below 1% of SAM
A very conservative target. It usually signals that SAM has been defined too broadly, or that the growth plan does not match the amount of capital being raised.
SOM around 1 – 10% of SAM
The range most commonly seen and readily accepted for the first three to five years. You will need to show that sales capacity and distribution channels are sufficient to reach it.
SOM above 20% of SAM
Only plausible in a very narrow niche or where the business is already a clear leader. Otherwise, revisit how SAM was defined before putting this figure into your materials.
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