Framework F019: Market Sizing – Calculate TAM, SAM and SOM

Define your total addressable market, prioritize reachable segments, and forecast with confidence

You can't build a credible business case without knowing the size of your market. Understanding what is market size, and how to calculate TAM, SAM, and SOM, is essential for product strategy, investor conversations, and go-to-market decisions.

This framework shows you how to quantify the Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). You’ll learn how to use top-down, bottom-up, and value-driven methods to estimate opportunity and growth — with real-world examples and formulas included.

What You Will Achieve With This Framework

✔ Understand and calculate TAM, SAM, and SOM using real examples

✔ Apply multiple market sizing approaches: top-down, bottom-up, and value theory

✔ Forecast market growth rate using industry data and historical trends

✔ Differentiate between niche, mass, new, and mature market types

✔ Build a compelling market narrative for pitches, product plans, or internal alignment

Who This Is For

  • Founders and strategists preparing investor decks

  • Product leaders mapping go-to-market or expansion plans

  • Innovation teams defining launch potential and resource allocation

  • Marketers building audience models or customer segmentation strategies

When to Use It

Use this framework when:

  • You’re launching or evaluating a new product or feature

  • You need to communicate opportunity size to funders or partners

  • You’re making go/no-go decisions about new markets

  • You want a clear answer to how to determine market size

What This Framework Replaces

✘ Hand-wavy estimates with no data or logic

✘ Misaligned strategy due to unclear market potential

✘ Overpromising or underestimating growth during fundraising

✘ Fuzzy audience targeting and overbuilt feature sets

How It Fits Into Your Innovation Process

Use this before GTM planning or roadmap finalization. It aligns your growth strategy with real opportunity — helping you focus where the potential actually is.

Framework Sections

  1. Why Market Size & Type Matter: Strategic planning, investor readiness, and resource allocation

  2. TAM, SAM, SOM Definitions: Clearly explained with examples

  3. How to Calculate Each Metric: With formulas and step-by-step examples — e.g., Fitness App, Sustainable Packaging

  4. Market Growth Rate Estimation: Based on historical data and trends

  5. Market Types: Niche, mass, new, and mature — with strategy guidance

  6. Market Sizing Methods: Top-down, bottom-up, value theory

  7. Final Checklist: Ensure each estimate is realistic, sourced, and strategic