TAM is everyone who could ever buy, SAM is the slice you can actually reach, and SOM is what you can win in the next year. This calculator does the only one that matters at the start: multiply the buyers you can genuinely reach by a conversion rate you would defend out loud, then by your annual price.
Year-one SOM = reachable buyers × conversion rate × annual price per customer
Counts the buyers you could realistically reach, applies an honest conversion rate, multiplies by your price, and gives you a year-1 SOM revenue number you can actually defend. Use this before you commit to a build, when you're stress-testing whether a niche is big enough. Garbage buyer = garbage SOM, so be specific about who you're counting.
Your numbers
Buyers you can realistically reach through your channels and geo.
Be honest. 1-3% cold, 5-15% warm, 20-40% strong audience.
Annual contract value. For monthly plans, multiply by 12.
The verdict
1,500 customers
A good living for one or two people and an awkward fit for anyone who took investment. Nothing wrong with a niche, as long as nobody has promised a shareholder otherwise.
What the number means
| Year-one SOM revenue | Reading | What to do about it |
|---|---|---|
| Under $250,000 | Act now | Too small to pay a team, and probably too small to pay you. Either widen the reachable audience or raise the price. Those are the only two dials, and the second is usually the honest one. |
| $250,000 to $2M | Fragile | A good living for one or two people and an awkward fit for anyone who took investment. Nothing wrong with a niche, as long as nobody has promised a shareholder otherwise. |
| $2M to $20M | Healthy | Big enough to build a real company, small enough that incumbents have not bothered to defend it yet. This is the pleasant middle of the market and it does not stay quiet forever. |
| Over $20M | Healthy | A large market, which is another way of saying a crowded one. The size is no longer the question. Why you win, and why they cannot copy it by Christmas, is. |
Worked examples
| Situation | Numbers in | Answer out | Verdict |
|---|---|---|---|
| Niche B2B tool | 8,000 buyers · 3% · $600/yr | $144K | Too small. Either the audience or the price has to move. |
| Freelancer SaaS | 50,000 buyers · 3% · $240/yr | $360K | Niche. Comfortable solo, tight for a funded team. |
| Vertical SaaS with a sales motion | 12,000 buyers · 8% · $6,000/yr | $5.8M | Worth pursuing. Small buyer count, serious contract value. |
| Mid-market SaaS with a sales team | 250,000 buyers · 4% · $2,400/yr | $24.0M | A large market, and you will not be the only one to have noticed. |
How this is calculated
SOM = reachable_buyers × (conversion_rate / 100) × annual_price_per_customer.
The result is your year-one Serviceable Obtainable Market in revenue terms. What you can earn in the first 12 months if you hit your conversion target on the buyers you can actually reach.
Assumptions baked in:
- Every customer pays the full annual price (no discounts, no churn within year one).
- Conversion is uniform across the buyer pool (in practice it's not; early adopters convert higher).
- You ignore the rest of the TAM. SOM, not TAM, is what your runway needs to match.
Verdict tiers are calibrated against typical bootstrapped vs venture economics: under $250K SOM a market won't pay for a team; $2M-$20M is the sweet spot for a real business that incumbents won't crush.
What this doesn't tell you
- Whether buyers want it. A $5M SOM with zero demand evidence is still zero customers. Use idea validation, not just market sizing.
- Whether you can actually reach them. SAM assumes channel-market fit. If your CAC > LTV you can't profitably acquire any of these buyers.
- How fast you'll get there. Year-one SOM is a ceiling, not a forecast. Most pre-PMF startups hit 5-15% of SOM in year one.
What is the difference between TAM, SAM and SOM?
TAM is the total market, every buyer on earth with the problem. SAM is the part of it your product, language, pricing and geography can actually serve. SOM is the slice you can realistically capture in a defined period, usually a year. Think of it as everyone with the problem, everyone you can reach with the problem, and everyone you can persuade this year. Only the last one has any bearing on next month.
How do you calculate market size from the bottom up?
Count buyers, apply a conversion rate, multiply by price. Bottom-up starts from units you could in principle verify, which is why investors trust it and why top-down percentages of a headline figure make them wince. The phrase one percent of a fifty billion dollar market is not a plan, it is a wish with a decimal point, and it has been the punchline of pitch meetings for about twenty years.
What conversion rate should I assume?
One to three percent for a cold audience who have never heard of you, five to fifteen percent for a warm one that already trusts you, and twenty to forty percent only if you have an engaged audience and a product they have been asking for. Founders routinely assume ten percent for strangers, which is roughly the response rate of a wedding invitation, not an advert. If in doubt, halve the number you first thought of and see whether the business still works.
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Free to embed, no permission needed, no tracking script smuggled in. The only condition is the credit link that comes with it, which seems a fair trade for the arithmetic.
<iframe src="https://shipfit.ai/calculators/embed/tam-sam-som" width="100%" height="620" style="border:1px solid #e2e8f0;border-radius:16px;" title="TAM SAM SOM calculator by ShipFit" loading="lazy"></iframe>Use this with
Jobs to be Done (JTBD)
The JTBD framework in plain terms: the four forces of progress, the switch timeline, and how the Christensen and Ulwick schools actually differ.
Market Research
Most founder market research is a TAM slide that nobody believes. The numbers that actually matter are smaller, harder to defend, and tell you whether the market exists for the ten-customer version of your business.
What is TAM, SAM, SOM?
Three nested market-sizing numbers. TAM (Total Addressable Market) is the entire global demand for the category. SAM (Serviceable Addressable Market) is the slice you could serve given your channels and geography. SOM (Serviceable Obtainable Market) is what you could realistically capture in 1-3 years. Most founders inflate TAM and skip SOM. The honest move is the opposite: start at SOM, work up. The ten-customer version of your business is more useful than the $10B TAM slide nobody believes.
Break-even calculator
How many units a month before the math stops bleeding?
LTV (Customer Lifetime Value)
The total profit a single customer brings in across their entire time as a customer. Used to decide how much you can afford to spend acquiring them. A predictive estimate, not a settled number.
Frequently asked questions
What's the difference between TAM, SAM, and SOM?
Why only three inputs? Other calculators ask for ten.
What conversion rate should I assume?
Does this account for churn and expansion revenue?
A market size is a guess with confidence.
ShipFit replaces the guess with sourced market data, a named buyer and a ranked pain, in about the time this calculator took.