Market Size

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Some technical stuff to get into here. There are multiple ways to calculate market size and we’re not going to go into them in this course, but here are some numbers you might expect to see in the market section of a pitch deck.

TAM – Total Achievable Market

The Total Achievable Market is a number that represents the total demand for a product/service. This is the very top number and will be bigger than is actually achievable (not even monopolies manage 100% of the TAM), but it gives an indication of the size of the industry and the opportunity. TAM is generally the sum total of revenues for a particular industry.

SAM – Serviceable Available Market

The serviceable available market is a portion of the TAM that is targeted by the company’s products/services and is within its reach. Again, it’s not an indication of what will actually be achieved as there will be competitors also vying for a share of the pie, but it gives an indication of the level of demand for the company’s specific products and services.

SOM – Share of Market (OR Serviceable Obtainable Market)

This is the portion of the SAM that is actually realistically obtainable. This is sometimes shown as a percentage or as a total number and represents the short-term target of the company. As previously mentioned, achieving 100% of the SAM is practically impossible and the SOM will depend on lots of factors such as the strength of competitors in the market, how easy the market is to reach, and the company’s market entry strategy.

Take a look at TAM, SAM and SOM when using the example of AIRBNB.

This is a really weird slide for founders and investors due to it being stupidly difficult to come up with accurate numbers. Founders will often try and make numbers seem bigger than they are and investors will assume that founders are making numbers seem bigger than they are.

For founders calculating market size, and for investors verifying market size, Google is your friend and as good a starting point as any to find news articles with some of the top level numbers you’re looking for.

For full reports with well-sourced stats, websites such as Statista and MiINTEL are a wealth of information. Individual reports will cost money, or you can pay a subscription to access the entire catalogue.

If you’re a student, it’s possible that your university already subscribes to MINTEL and you can get access to reports for free! Ask at your university library and they may even be able to help you with a search.