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TAM SAM SOM calculator

The TAM SAM SOM calculator sizes a market bottom-up: total possible buyers times the annual price gives TAM, the share you can serve gives SAM, and the share you can realistically win gives SOM. It also shows how many customers that SOM means. The output is only as good as your buyer count and percentages, which you have to source yourself.

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Idea (1)

Name and one-line pitch

Unit economics and market size

Plain arithmetic on your own numbers. Use ranges you can defend, and replace guesses with real figures as experiments come back.

Currency symbol

Market size, bottom-up: TAM, SAM, SOM

All possible buying customers

Price per customer / year

Share you can serve (SAM)

Share you can win (SOM)

TAM

$2,400,000

Every possible buyer × annual price

SAM

$720,000

The part your product and channels can serve

SOM

$36,000

≈ 150 customers you could realistically win

Revenue goal / year

You need 417 paying customers, which is 278% of your SOM estimate.

Unit economics: LTV, CAC and payback

Price per customer / month

Gross margin

Monthly churn

Cost to acquire one customer

Lifetime value

$320

≈ 20 months average lifetime

LTV : CAC

3.2 : 1

3:1 or better is a common healthy target

CAC payback

6.3 mo

Months of gross profit to earn back acquisition cost

Gross profit / month

$16

Per customer

Autosaved in this browser only. Nothing is sent to AltFTool.

How to use the tam sam som calculator

1
Count possible buyers
Enter the number of people or companies that could ever buy, from a source you can cite.
2
Set the annual price
Enter what one buyer would pay per year.
3
Choose the serviceable share
Enter the percentage you can actually serve given your region, language, channel and product scope.
4
Choose the share you can win
Enter the percentage of that serviceable market you could realistically win in three to five years.

How it works

TAM = buyers x annual price.
SAM = TAM x serviceable %.
SOM = SAM x win %.
Customers at SOM = buyers x serviceable % x win %, rounded to a whole number.

Worked example: software for small accounting firms

200,000 possible buyers at $600 a year gives a TAM of $120,000,000.

If you can serve 25% of them, SAM is $30,000,000.

Winning 5% of that gives a SOM of $1,500,000, which is 2,500 customers.

Reaching $1,000,000 a year at $600 per customer would take 1,667 customers.

What the tam sam som calculator does not do

Bottom-up only: it does not look up market data, so the buyer count must come from your own research.
The serviceable and win percentages are judgement calls; small changes move SOM a lot.
A large TAM says nothing about whether buyers feel the problem. Pair it with the validator.