·4 min read
MVP Market Size: How Big Is Your Opportunity
Investors ask about market size. You should care too. Here is how to estimate without hiring consultants.
Market Size Terms
| Term | Meaning | Example |
|---|---|---|
| TAM | Total addressable market | All businesses that could use CRM |
| SAM | Serviceable addressable market | SMBs in English-speaking countries |
| SOM | Serviceable obtainable market | SMBs you can realistically reach in year 1 |
Bottom-Up Calculation
Start with what you can count:
- •Number of potential customers in your niche
- •Multiply by what they would pay annually
- •This is more credible than top-down estimates
Top-Down Calculation
Start with industry reports:
- •Find total industry revenue
- •Estimate your percentage of that market
- •Be realistic about what you can capture
Free Research Sources
- •Google search trends
- •Competitor funding announcements
- •Industry association reports
- •Government census and business data
- •LinkedIn job postings in your target market
What Size Do You Need
- •Lifestyle business: 10M+ market is fine
- •VC-backed: Usually want 1B+ TAM
- •Bootstrapped SaaS: 100M market can work
- •Niche B2B: Even smaller can be profitable
A small market you can dominate beats a huge market where you are invisible. Focus on SOM, not TAM.