Market Sizing Template: How to Build TAM SAM SOM Slides

Market sizing is the process of estimating the total revenue opportunity for a product or service, typically expressed as TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market). It answers fundamental business questions: How big is the opportunity? Is it worth pursuing? Can it support a venture-scale business?

Done poorly, market sizing signals that you don't understand your market or your customers. Done well—with defensible bottom-up calculations rather than inflated top-down claims—it demonstrates the analytical rigor that builds investor and stakeholder confidence.

This guide provides a complete market sizing template covering TAM, SAM, and SOM calculations, top-down versus bottom-up methodologies, reliable data sources, common mistakes to avoid, and how to present your findings effectively.

After building market sizing analyses for 70+ investor presentations, M&A due diligence, and market entry decisions, we've tracked which methodologies survive investor scrutiny and which get immediately challenged. The difference between credible and dismissible market sizing comes down to assumption quality, not calculation complexity.

What Is Market Sizing?#

Market sizing is the process of estimating the total revenue opportunity for a product or service. It answers fundamental business questions: How big is the opportunity? Is it worth pursuing? Can it support a venture-scale business?

Market sizing serves multiple purposes across business contexts:

For startups and investors: Evaluating whether an opportunity is large enough to justify investment. VCs typically want TAM of $1 billion or more for venture-scale returns.

For corporate strategy: Assessing market entry decisions, prioritizing R&D investments, and allocating resources across business units.

For consultants: Structuring case interview answers, building client recommendations, and validating strategic hypotheses.

According to Management Consulted, market sizing evaluates your ability to structure ambiguous business problems, make logical assumptions, and communicate clearly--skills that firms like McKinsey, Bain, and BCG value highly in candidates and project work.

Why Market Sizing Matters for Presentations#

In investor presentations and strategy decks, market sizing is often the most scrutinized slide. It tells stakeholders:

1. Is this opportunity big enough? A $50 million market can't produce a unicorn.
2. Do you understand your customer? Bottom-up calculations show customer knowledge.
3. Are you realistic? Inflated numbers signal naivety or dishonesty.
4. Is your approach defensible? Clear methodology builds credibility.

According to Antler, TAM represents your ultimate market opportunity, SAM narrows it to segments you can effectively target, and SOM focuses on what you can actually achieve in the near to mid-term.

TAM SAM SOM Explained#

TAM, SAM, and SOM form the core framework for market sizing. Understanding each metric and how they relate is essential for building credible analyses.

TAM: Total Addressable Market#

TAM represents the total revenue opportunity if you achieved 100% market share--a theoretical maximum that sets the upper bound of your opportunity.

Definition: All potential revenue in your market category, globally, without constraints.

What it answers: "How big is the entire opportunity?"

Example calculation:

Global companies needing CRM software: 30 million
Average CRM spend per company: $3,000/year
TAM = 30 million x $3,000 = $90 billion

TAM matters to investors because it determines the upside ceiling. A company that captures 10% of a $10 billion TAM has very different potential than one targeting a $100 million market.

SAM: Serviceable Addressable Market#

SAM is the portion of TAM you can actually serve with your current business model, geographic reach, and go-to-market strategy.

Definition: The segment of TAM reachable given your specific constraints.

What it answers: "What portion can we actually target?"

SAM filters include:

• Geographic availability (regions where you operate)
• Customer segment (company size, industry, use case)
• Technical requirements (integration needs, infrastructure)
• Distribution capability (sales channel reach)

Example calculation:

TAM: $90 billion (global CRM market)
North America only: x 35% = $31.5 billion
SMB segment (under 500 employees): x 40% = $12.6 billion
Companies using cloud infrastructure: x 70% = $8.8 billion
SAM = $8.8 billion

According to HubSpot, SAM should reflect genuine constraints of your business model, not arbitrary reductions to make numbers look more conservative.

SOM: Serviceable Obtainable Market#

SOM is the realistic market share you can capture within a defined timeframe--typically 3-5 years. This is where competitive dynamics and execution reality enter the analysis.

Definition: The portion of SAM you'll realistically win.

What it answers: "What will we actually capture?"

SOM depends on:

• Competitive intensity and differentiation
• Your sales and marketing capacity
• Brand awareness and market position
• Switching costs and customer inertia

Example calculation:

SAM: $8.8 billion
Realistic market share in 3 years: 2%
SOM = $8.8 billion x 2% = $176 million

For a detailed breakdown of TAM, SAM, and SOM calculations with additional examples, see our TAM SAM SOM template guide.

Typical TAM to SAM to SOM Ratios#

These ratios vary by industry and business model. A highly focused B2B startup might have SAM at 15% of TAM, while a horizontal software platform might serve 60% of TAM.

Top-Down vs Bottom-Up Market Sizing#

There are two fundamental approaches to calculating market size. Understanding when to use each--and ideally using both--produces the most credible analysis.

Top-Down Market Sizing#

Top-down starts with broad industry data and applies filters to reach your specific market.

How it works:

1. Start with total industry market size (from research reports)
2. Apply percentage filters for your segment
3. Narrow to geographic and customer scope
4. Arrive at addressable market

Example: B2B Software Company

Pros of top-down:

• Fast to execute (1-2 hours)
• Uses credible third-party sources
• Good for new markets with limited data
• Easy to cite and validate

Cons of top-down:

• Can inflate opportunity size
• Relies on report category definitions
• May not reflect your actual customer
• Less credible to sophisticated investors

Bottom-Up Market Sizing#

Bottom-up starts with specific customer data and builds up to total market.

How it works:

1. Count potential customers in your target segment
2. Determine average revenue per customer
3. Multiply for total market size
4. Validate against industry data

Example: B2B Software Company

Pros of bottom-up:

• Highly credible (shows customer knowledge)
• Harder to inflate
• Directly tied to go-to-market strategy
• Preferred by investors

Cons of bottom-up:

• Time-intensive (1-2 days)
• Requires primary research
• May miss market segments
• Needs multiple data sources

When to Use Each Approach#

According to IGotAnOffer, based on experience across projects at McKinsey and BCG, bottom-up is generally preferred to top-down for investor presentations and strategic decisions.

The Triangulation Method#

The most robust market sizing uses both approaches and reconciles differences.

Step 1: Calculate TAM using bottom-up (customers x price) Step 2: Calculate TAM using top-down (industry data x filters) Step 3: Compare results and explain any gap Step 4: Use bottom-up as primary number, top-down as validation

According to Seer Interactive, if the top-down and bottom-up estimates differ by more than 15%, it's a signal to revisit your underlying ratios and assumptions.

Example reconciliation:

• Bottom-up TAM: $5.4 billion
• Top-down TAM: $5.5 billion
• Gap: 2% (within acceptable range)
• Explanation: "Our bottom-up analysis closely matches industry estimates, validating our customer count and pricing assumptions."

If your bottom-up is significantly smaller than top-down, explain why: "Industry reports include enterprise customers we don't target. Our focused approach addresses the mid-market segment specifically."

Market Sizing Slide Templates#

Effective market sizing requires clear visual presentation. Here are the most common templates and when to use each.

Template 1: Nested Circles (TAM SAM SOM)#

The classic visualization showing three concentric circles with TAM as the outer ring, SAM as the middle ring, and SOM as the center.

Best for: Simple presentations, quick visual communication Include: Dollar amounts, labels, calculation methodology

Design guidelines:

• Use distinct but related colors (light to dark gradation)
• Keep proportions roughly accurate (SOM shouldn't look like 50% of TAM)
• Add callout boxes explaining each tier
• Include source citations

Template 2: Funnel Visualization#

A funnel showing market narrowing from TAM at the top through SAM to SOM at the bottom.

Best for: Showing filtering logic, explaining methodology Include: Each filter/constraint as a labeled step

Design guidelines:

• Show what criteria reduce each tier
• Include percentages at each step
• Make the visual flow match your verbal explanation
• Label each reduction clearly

Template 3: Waterfall Chart#

A waterfall chart showing the reduction from TAM to SAM to SOM with each filter as a separate bar.

Best for: Detailed presentations explaining each constraint Include: Each filter as a distinct segment

This approach works particularly well when you have multiple filters. Each filter becomes a step showing how much market is excluded and why:

TAM: $10B
(-) Non-NA geography: -$4B
(-) Enterprise (not target): -$2B
(-) No cloud infrastructure: -$1B
= SAM: $3B

Template 4: Market Map (Mekko Chart)#

A Mekko chart showing market segments with your target area highlighted.

Best for: Complex markets with multiple segments, competitive positioning Include: Segment sizes, growth rates, your target area

Tools like Deckary make creating these visualizations straightforward. Rather than struggling with PowerPoint's basic shapes, you can build data-driven charts that update automatically when your numbers change.

Template Design Best Practices#

Step-by-Step Market Sizing Tutorial#

Let's walk through a complete market sizing analysis using a real-world example.

The Scenario#

You're building a market sizing slide for a SaaS company that provides expense management software for mid-sized professional services firms (accounting, law, consulting) in North America.

Step 1: Define Your Market Boundaries#

Before calculating, clearly define what you're measuring:

Product category: Expense management software Target customer: Professional services firms with 50-500 employees Geography: United States and Canada Use case: Employee expense tracking and reimbursement

Step 2: Bottom-Up TAM Calculation#

Identify potential customers:

• Professional services firms (NAICS codes 54) in US + Canada
• With 50-500 employees
• Source: Census Bureau, Canadian Business Patterns

Determine average revenue per customer:

• Average employees in target segment: 150
• Expense management software cost: ~$8/employee/month
• Annual contract value: 150 x $8 x 12 = $14,400

Calculate TAM:

54,600 firms x $14,400 average ACV = $786 million TAM

Step 3: Top-Down Validation#

Cross-reference with industry data:

• Global expense management software market: $6.5B (Gartner 2025)
• North America share: ~45% = $2.9B
• Professional services vertical: ~15% = $435M
• Mid-market segment: ~60% = $261M

Reconciliation: Our bottom-up ($786M) is higher than the top-down cross-check ($261M). The difference is explained by:

1. Top-down uses narrower category definition (excludes adjacent features)
2. Our bottom-up includes full expense management spend, not just core software
3. Adjusted TAM considering both: $500-800M range

Step 4: Calculate SAM#

Apply filters based on business model constraints:

Step 5: Calculate SOM#

Estimate realistic market share:

SOM = $330M x 4% = $13.2M annual revenue opportunity

Step 6: Build the Slide#

Structure your market sizing slide:

1. Headline: Professional Services Expense Management Market
2. TAM: $786M (with calculation footnote)
3. SAM: $330M (with filters listed)
4. SOM: $13M (with timeline and assumptions)
5. Sources: Census Bureau, Gartner, company analysis

For detailed guidance on presenting market sizing in investor contexts, see our investor presentation template guide.

Data Sources for Market Sizing Research#

Credible market sizing requires reliable data sources. Here's where to find the information you need.

Industry Research Firms#

These provide comprehensive market reports and forecasts:

Market Databases#

According to Yale Business Research Guide, these platforms aggregate data across industries:

Statista integrates more than 80,000 diverse topics from over 22,500 international sources, making it useful for cross-referencing multiple data points.

Government and Public Data#

Free sources with high credibility:

• US Census Bureau: Company counts by industry, size, geography
• Bureau of Labor Statistics: Employment data, wage information
• SEC EDGAR: Public company financials and disclosures
• Industry trade associations: Sector-specific research and statistics

Primary Research Sources#

For bottom-up analysis, primary data often provides the most credible inputs:

• Customer interviews: Validate pricing and purchase behavior
• Competitor analysis: Public filings, pricing pages, case studies
• LinkedIn Sales Navigator: Company counts by segment
• Industry conferences: Market intelligence and networking

Data Source Best Practices#

1. Cite everything. Every number in your market sizing should have a source.
2. Cross-reference. Use multiple sources to validate key figures.
3. Prefer recent data. Market conditions change; use data from the last 2-3 years.
4. Understand methodology. Know how your sources defined the market.
5. Note limitations. Be transparent about data gaps or assumptions.

Common Market Sizing Mistakes#

After reviewing hundreds of market sizing analyses, these mistakes consistently undermine credibility.

Mistake 1: The "1% of China" Fallacy#

The problem: "The Chinese market is $500 billion. If we capture just 1%, we'll have a $5 billion business."

Why it fails: This approach sounds reasonable but ignores market entry barriers, competitive dynamics, and the difficulty of capturing even 0.1% of a massive market. Investors hear this constantly and immediately lose interest.

The fix: Start with bottom-up analysis. Calculate how many specific customers you can realistically acquire, at what price point, through what channels. Then see what market share that represents.

Mistake 2: Wrong Market Definition#

The problem: Claiming your TAM is "the $500B restaurant industry" when you sell accounting software to restaurants.

Why it fails: Your TAM isn't what your customers spend on everything--it's what they spend on your category. Restaurant industry size includes food costs, labor, real estate, and equipment. None of that is addressable by software.

The fix: Define TAM as spending in your specific product category. "Restaurant accounting software market" is the correct frame, not "restaurant industry."

Mistake 3: SAM Without Clear Filters#

The problem: SAM that's 95% of TAM with no explanation of why certain customers are excluded.

Why it fails: It suggests you haven't thought critically about your go-to-market constraints. Every business has limitations--geography, customer segment, technical requirements--that should filter TAM to SAM.

The fix: Be explicit about each constraint. "We only serve companies with 100+ employees (filter 1), using cloud infrastructure (filter 2), in North America (filter 3)."

Mistake 4: Unrealistic SOM#

The problem: Claiming 15% market share in year three when the market has established competitors.

Why it fails: Experienced investors know that 15% market share in a competitive market takes years to build, even with exceptional execution.

The fix: Benchmark against comparable companies. What share did similar startups achieve in similar timeframes? 1-5% SOM for a funded startup in a competitive market is typically more defensible than double-digit claims.

Mistake 5: Top-Down Only#

The problem: Slapping a number from a Gartner report on the slide without demonstrating customer understanding.

Why it fails: According to GoingVC, if you rely solely on top-down, it can easily come across as untrustworthy. Investors want to see evidence of original research.

The fix: Build bottom-up as your primary calculation. Use top-down only for validation and sanity checking.

Mistake 6: Static Market Analysis#

The problem: Presenting TAM as a fixed number without acknowledging market growth.

Why it fails: A $1B market growing at 25% annually is very different from a $1B market declining at 5%. Growth rate dramatically affects the opportunity.

The fix: Include market growth rate in your analysis. Show where the market will be in 3-5 years, not just today.

Mistake 7: Inconsistent Definitions#

The problem: Using "transportation" as TAM definition but "ride-sharing in urban areas" for SAM.

Why it fails: When market definitions change between tiers, the percentages become meaningless. You can't calculate meaningful SAM as a percentage of TAM if they're defined differently.

The fix: Use consistent definitions throughout. TAM and SAM should use the same market frame; SAM simply applies filters within that frame.

Presentation Tips for Market Sizing Slides#

How you present market sizing matters as much as the analysis itself.

Structure Your Narrative#

Build a logical story:

1. Set context: What market are we sizing?
2. Show TAM: This is the total opportunity
3. Explain SAM: Here's what we can actually target (with filters)
4. Present SOM: Here's what we'll realistically capture
5. Cite methodology: This is how we calculated these numbers
6. Invite questions: Walk me through any assumptions you'd like to explore

Anticipate Questions#

Prepare for these common investor questions:

Visual Best Practices#

Keep it simple. The nested circles visualization works because it's immediately understandable. Don't overcomplicate with 3D effects or elaborate graphics.

Show your work. Include a footnote or appendix slide with your calculation methodology. Transparency builds trust.

Use professional tools. Amateur Excel charts signal amateur analysis. Tools like Deckary create consulting-quality visualizations that communicate market analysis clearly.

Cite sources prominently. Every number needs attribution, visible on the slide or in footnotes.

For Pitch Decks Specifically#

In investor presentations, market sizing connects to your overall narrative:

• Position it early: Typically slides 4-6, after problem/solution
• Connect to your ask: "This $500M SAM is why we're raising $5M to capture 3%"
• Reference growth: Growing markets are more attractive than static ones

For complete pitch deck guidance, see our startup pitch deck and Series A pitch deck guides.

Market Sizing for Different Contexts#

Market sizing approaches vary by audience and purpose.

For Investor Presentations#

Emphasis: Bottom-up methodology, defensible assumptions, realistic SOM

Key elements:

• TAM of $1B+ (for venture-scale opportunities)
• Clear SAM filters tied to business model
• Conservative SOM with path to expansion
• Growth rate and market trends

For Case Interviews#

Emphasis: Structured thinking, reasonable assumptions, quick calculation

Key elements:

• Clear framework before diving into numbers
• Logical segmentation (MECE)
• Round numbers for mental math
• Confidence in sanity-checking results

According to Hacking the Case Interview, a strong market sizing answer includes a clear process before the math begins, realistic and defensible assumptions, clean arithmetic with verbal reasoning, and a short, confident summary.

For Corporate Strategy#

Emphasis: Triangulated data, competitor context, actionable segmentation

Key elements:

• Multiple data sources cross-referenced
• Competitive market share analysis
• Segment attractiveness rankings
• Investment prioritization implications

For M&A and Due Diligence#

Emphasis: Verified data, conservative assumptions, risk identification

Key elements:

• Third-party validated figures
• Sensitivity analysis on key assumptions
• Downside scenarios
• Customer concentration analysis

Summary#

Market sizing is a fundamental skill for consultants, founders, and strategists. Done well, it demonstrates analytical rigor and market understanding. Done poorly, it undermines credibility for everything else in your presentation.

Key takeaways:

1. Understand TAM, SAM, and SOM. TAM is theoretical maximum, SAM is reachable market, SOM is realistic capture. Each serves a different analytical purpose.

2. Bottom-up beats top-down. For investor presentations and strategic decisions, bottom-up calculations are more credible because they show customer understanding.

3. Use both methods. Calculate bottom-up as primary, top-down as validation. Reconcile differences and explain gaps.

4. Be rigorous about SAM filters. Each filter should reflect a genuine business constraint. SAM of 90%+ of TAM signals weak analysis.

5. Keep SOM realistic. 1-5% of SAM is credible for most startups. Claims above 10% need strong justification.

6. Cite your sources. Every number needs attribution. Cross-reference multiple sources for key figures.

7. Visualize effectively. Nested circles, funnels, or waterfall charts communicate faster than tables.

8. Prepare to defend every number. Know your methodology cold. Investors will ask.

For creating professional market sizing visualizations, tools like Deckary offer Mekko charts, waterfall charts, and other chart types that communicate market analysis clearly. Combined with Excel linking for easy updates, you can build presentation-ready slides without hours of manual formatting.

Related Guides#

• TAM SAM SOM Template -- Detailed formulas and examples
• Startup Pitch Deck -- Complete pitch deck framework
• Investor Presentation Template -- What VCs expect
• Series A Pitch Deck -- Metrics and slides for Series A