How big is the market you can actually reach?
Start with how many companies could buy and what each is worth in a year. Narrow it twice to see what you can serve and what you can win, in dollars and in companies.
Calculator
You can reach about $5.76 million a year, out of a total market of $96 million.
- Total market (TAM)
- $96 million
- 8,000 companies
- Serviceable market (SAM)
- $57.6 million
- 4,800 companies
- Obtainable market (SOM)
- $5.76 million
- 480 companies
- Total market
- $96 million
- Serviceable market
- $57.6 million
- Obtainable market
- $5.76 million
How it is worked out
total market = fitting companies multiplied by yearly revenue per customer
serviceable market = total market x fraction you can serve
obtainable market = serviceable market x fraction you can win
company counts follow the same two shares, starting from the number of fitting companies
The total market is every account that could buy, at full yearly value. The serviceable market is the part your product, regions and pricing can actually serve. The obtainable market is the part you can realistically win in the period you are planning for.
The two percentages are your estimates. Base them on counts you can check, such as how many companies sit in a country you serve or a size band you target, and write down where each count came from.
Dollar amounts from one million up are spelled out, for example $57.6 million, to at most two decimals. Company counts are rounded to whole companies for display only; the calculation keeps the exact figure. A share of 0% gives a market of $0, not a blank.
Worked by hand
The same sum with the starting example, one step at a time. Check your own numbers against it.
- Total market: 8,000 fitting companies times $12,000 a year is $96 million.
- Serviceable market: $96 million times 60% is $57.6 million, and the company count shrinks the same way to 4,800.
- Obtainable market: $57.6 million times 10% is $5.76 million, and the company count falls to 480.
How to read the result
- Read the three numbers as a funnel: each one is a slice of the one above it, so the obtainable figure is always the smallest.
- Vary a single input and leave the rest to find the assumption that moves the answer most. The percentages usually matter more than the account count.
- Compare the obtainable figure with the revenue target you are planning against. If the two are close, the plan has little room for error.
- Both percentages must be between 0 and 100. The company count and yearly revenue must be above zero for the result to mean anything.
- The company counts beside each figure are a sanity check. If the obtainable count is smaller than the number of customers you could handle in a year, the plan is limited by the market, not by your capacity.
Questions
- Where do the percentages come from?
- From you. Use counts you can check, such as the number of accounts in a country you serve or a size band you sell to, and keep a note of the source for each one.
- What is the difference between the three numbers?
- The total market is everyone who could buy. The serviceable market is the portion your offer and channels reach today. The obtainable market is the part you can realistically win in your planning period.
- How do I count fitting companies?
- Count the companies that match your buyer description: the industries, size band and regions you sell to. A prospect list built from those filters gives you a number you can check.
- What yearly revenue should I enter?
- What one customer pays you in a year, using your own price list or your average contract. Enter one figure for the whole market and run the calculator again for a second plan or segment.
- Why are the percentages limited to 0 to 100?
- A share of a market cannot be negative or larger than the whole, so the calculator rejects values outside that range instead of producing a result that makes no sense.
- Does this send my numbers anywhere?
- No. The calculation runs in your browser, nothing is sent over the network, and nothing is saved when you leave the page.