Estimating the TAM is a process to estimate the total revenue you could achieve (in units of dollars per year) in your Beachhead Market if you achieved 100 percent market share.
The TAM needs to be an appropriate size for your new venture. Too big and you won’t be able to mobilize enough resources to compete; too small and your company won’t have enough revenue to sustain itself. The exercise of calculating the TAM also increases your team’s knowledge of the market. Beyond just a simple number, your team will exit this step understanding what makes the selected Beachhead Market attractive. This understanding may be more important than your TAM size and a simple “go/no go” decision.
To calculate the TAM, you will do the following:
The TAM will be ...