Opportunity Sizing & TAM Calculator

Every VC Will Ask You About TAM. Most PMs Give an Answer That's Either Fantasy or Google Search.

Here's what typically happens. A PM needs to size a market opportunity. They Google "[industry] market size," find a Grand View Research report that says "$47.2 billion by 2028," paste it into a deck, and move on. That number is meaningless for their product. It's the total addressable market for the entire industry — every company, every geography, every use case. Their product might address 0.3% of it.

On the other end, some PMs go full bottom-up and end up with a TAM of $12 million, which is technically honest but doesn't justify the engineering investment. The art of opportunity sizing is finding the number that's both truthful and useful for decision-making.

The TAM/SAM/SOM Framework Is Misunderstood

TAM (Total Addressable Market) answers: "If we had 100% market share in our addressable segment, how big is the revenue?" SAM (Serviceable Addressable Market) answers: "Of that total, what portion can we actually reach with our current go-to-market?" SOM (Serviceable Obtainable Market) answers: "Realistically, what can we capture in the next 2-3 years?"

Most teams only calculate TAM. That's like saying your restaurant could make $50 billion because that's the size of the global food industry. According to McKinsey's guide to market sizing, the teams that produce the most useful estimates use both top-down (industry reports and filtering) and bottom-up (unit economics extrapolation) approaches, then triangulate where they converge. When the two approaches produce wildly different numbers, that's a signal your assumptions need work.

A Gartner analysis of product investment decisions found that 72% of successful new product launches had market sizing within 30% of actual first-year revenue, while failed launches had estimates that were off by 5-10x. The accuracy wasn't about better data — it was about more honest assumptions.

How This Prompt Helps

This prompt walks you through both top-down and bottom-up calculations, then compares the results. For top-down, it helps you filter a total market by geography, segment, price point, and buyer type. For bottom-up, it starts with your unit economics — how many customers you can acquire, at what price, with what conversion rate — and builds upward.

The key feature is assumption transparency. Every number in the output is tagged with its source and confidence level. When you present this to leadership or investors, you can defend every line.

When to Reach for This

• You're building a business case for a new product or major feature investment and need market sizing
• A quarterly planning cycle requires you to estimate the revenue potential of different bets
• You're pitching to investors or internal leadership and need a defensible TAM/SAM/SOM breakdown
• You want to compare two opportunities (build Feature A vs. Feature B) on revenue potential, not just user demand
• Your team is entering a new market and needs to validate whether the opportunity justifies the investment

What Good Looks Like

A strong opportunity sizing output shows TAM, SAM, and SOM as a funnel — each step smaller than the last, with clear reasoning for each filter. The bottom-up and top-down estimates should be within 2-3x of each other. If they're further apart, the output should flag which assumptions are weakest. Every number should cite its source: industry report, internal data, or stated assumption.

Sources

• A Guide to Market Sizing — McKinsey
• Predicting New Product Success — Gartner