| name | market-sizing |
| description | Estimates TAM, SAM, and SOM with top-down and bottom-up methodologies, assumptions documentation, and presentation-ready outputs. Use for business plans or investor pitches. |
| allowed-tools | Read Write Glob |
| metadata | {"author":"matthewhitcham","version":"1.0"} |
Market Sizing
When to Use This Skill
Use this skill when you need to:
- Estimate Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM)
- Prepare market size estimates for an investor pitch or business plan
- Evaluate a new market opportunity before entering
- Validate whether a business idea has sufficient market potential
DO NOT use this skill for competitive analysis, go-to-market strategy, or financial projections. This is for market size estimation specifically.
Core Principle
MARKET SIZING IS ABOUT DEFENDABLE ASSUMPTIONS, NOT PRECISE NUMBERS — SHOW YOUR MATH, CITE YOUR SOURCES, AND TRIANGULATE WITH MULTIPLE METHODS.
Phase 1: Brief
Required Inputs
| Input | What to Ask | Default |
|---|
| Product/service | "What are you selling? Describe it in one sentence." | Must be provided |
| Target customer | "Who is your ideal buyer? (demographics, company size, industry)" | Must be provided |
| Geography | "What market? (US, North America, global, specific country)" | United States |
| Pricing | "What is your price point or expected annual revenue per customer?" | Must be provided |
| Purpose | "What is this for? (pitch deck, internal planning, go/no-go decision)" | Pitch deck |
| Known data | "Do you have any existing market research, competitor revenue data, or industry reports?" | None — will research |
GATE: Confirm brief before proceeding.
Phase 2: Estimate
Dual Methodology
Always use BOTH approaches and compare:
Top-Down (TAM → SAM → SOM):
- Start with total industry revenue or total potential buyers
- Narrow by geography, segment, and product fit
- Apply realistic market share assumptions
Bottom-Up (Unit Economics → Scale):
- Start with your price per customer
- Multiply by the number of realistic customers you can reach
- Scale by year with growth assumptions
Definitions
- TAM: Total revenue if you captured 100% of the market globally
- SAM: The segment of TAM you can realistically serve (geography, segment, product fit)
- SOM: The portion of SAM you can realistically capture in 1-3 years
GATE: Present the preliminary estimates with assumptions and wait for feedback.
Phase 3: Build
Deliverables
1. Market Sizing Document
- TAM, SAM, SOM with dollar values
- Top-down and bottom-up calculations shown step by step
- All assumptions listed and sourced
- Confidence level for each estimate (high, medium, low)
2. Assumptions Table
| Assumption | Value | Source | Confidence |
|---|
| Total US small businesses | 33.2 million | SBA 2024 | High |
| % that use AI tools | 15% | Industry report | Medium |
| Willingness to pay $X/year | 5% of addressable | Comparable products | Low |
3. Visual Market Map
- Concentric circles showing TAM → SAM → SOM
- Dollar values labeled at each level
- Key assumptions annotated
4. Sensitivity Analysis
- How the SOM changes with different assumptions (optimistic, base, conservative)
- Which assumptions have the biggest impact on the final number
Phase 4: Polish
Pitch-Ready Output
Format the market sizing for the intended audience:
- Investor pitch: One slide with concentric circles, big numbers, and 2-3 key assumptions
- Internal planning: Detailed document with full methodology
- Go/no-go decision: Summary table with risk assessment
Credibility Checklist
Example 1: B2B SaaS Tool for Freelancers (US market)
TAM: 73M freelancers globally x $200/year = $14.6B
SAM: 20M US freelancers in knowledge work x $200/year = $4B
SOM: 0.1% in Year 1 = 20,000 customers x $200 = $4M
Example 2: Local Service Business (city-level market)
TAM: 500,000 households in metro area x $500/year avg spend on service = $250M
SAM: 50,000 target-income households x $500 = $25M
SOM: 2% market share in Year 1 = 1,000 customers x $500 = $500K
Anti-Patterns
- "Trillion-dollar market" claims — if your TAM is the entire global economy, you have not narrowed enough. Be specific.
- Only top-down — top-down without bottom-up validation produces fantasy numbers. Always triangulate.
- Unsourced assumptions — "We assume 10% adoption" without justification is guessing. Cite comparable products or research.
- SOM equals SAM — claiming you will capture your entire serviceable market is not credible. Be realistic about market share.
- Static sizing — markets grow, shrink, and shift. Note the growth rate and direction.
Recovery
- No industry data available: Use proxy industries, comparable company revenues, or first-principles calculation from census/demographic data.
- Top-down and bottom-up estimates diverge wildly: Investigate which assumptions drive the gap. The truth is usually between the two.
- Market looks too small: Consider: is the market growing? Can you expand the product to adjacent segments? Is this a niche worth owning?
- Market looks too big: Narrow the SAM further. A $100B TAM with a realistic $500K SOM is a better story than an unrealistic $10B claim.
