market-sizing-analysis

Market Sizing Analysis Skill

Skill Overview

An intelligent market sizing analysis assistant that helps founders and analysts calculate market opportunities using the three-layer TAM/SAM/SOM framework. It supports three validation approaches: top-down, bottom-up, and value-based theory.

Use Cases

1. Pitch Deck Preparation for Fundraising

When presenting a business plan to investors, provide credible market sizing data. Build the most persuasive TAM/SAM/SOM framework through bottom-up analysis, and cross-validate with top-down data so the market opportunity can stand up to scrutiny.

2. New Product Market Assessment

Before deciding to launch or expand a product, quantify the true capacity of the target market. Use customer segmentation and pricing models to calculate the available revenue opportunity and determine whether the opportunity is worth pursuing.

3. Competitive Analysis

Understand the overall size of your sector and players’ market shares. Use industry reports and public data to estimate competitors’ share of the market, and identify your entry space.

Core Features

1. Three-Layer Market Framework Calculation

Automatically calculates TAM (Total Addressable Market), SAM (Serviceable Available Market), and SOM (Serviceable Obtainable Market). TAM represents the long-term vision, SAM reflects the scope your product can realistically cover, and SOM provides a practical target you can achieve within 3–5 years—meeting diverse needs from strategic planning to financial forecasting.

2. Multi-Method Validation

Offers three analysis paths—top-down (industry report filtering), bottom-up (cumulative customer calculations), and value-based theory (quantified value users are willing to pay for). Cross-checks results against each other to avoid bias from any single method and improves data credibility.

3. Industry Template Support

Built-in calculation templates for different industries such as SaaS, e-commerce platforms, and B2B services. Provides formulas and examples for industry-specific metrics (e.g., ACV, GMV, ARPU) to quickly adapt to specific business scenarios.

FAQs

What’s the difference between TAM, SAM, and SOM?

TAM (Total Addressable Market) is the total addressable market—the entire customer base the product could cover in an ideal scenario. SAM (Serviceable Available Market) is the serviceable market—the portion you can actually reach after considering constraints such as product capabilities and geography. SOM (Serviceable Obtainable Market) is the obtainable market—based on competitive dynamics and your own resources, the market share you can achieve within 3–5 years (typically 2–5% of SAM).

What methods are used for market sizing analysis?

There are three main methods:
1) Top-down—start from industry reports, then narrow down the target market through layers of geographic and segment filtering.
2) Bottom-up—accumulate from customer counts and average order value; it’s more data-robust but time-consuming.
3) Value-based theory—estimate value based on quantified benefits derived from solving user problems; it fits well for innovative categories.
It’s recommended to cross-validate at least two methods, and a result difference within 30% is generally considered reasonable.

What percentage of SAM should SOM be?

For new entrants, within 3 years SOM is typically around 2% of SAM, and a 5-year target is usually about 5%. A share above 10% requires strong competitive advantages. The exact assumption also depends on market concentration: a fragmented market may support higher share, while a more monopolistic market may require lower expectations.