Is my market big enough?

Market size is how much a group of customers could spend on a product in a set period, usually a month or a year. It is the number of people or businesses with the problem multiplied by what each would pay. For a new business, the useful version counts only the people you could realistically reach.

Multiply three numbers: how many people have the problem, the share of them you could realistically reach, and what each would pay. 40,000 people, reaching 1 in 20, at $25 a month comes to 2,000 people and $50,000 a month if every one of them paid.

TAM, SAM and SOM are three nested estimates of market size. TAM (total addressable market) is everyone with the problem times the price. SAM (serviceable available market) is the part you could actually serve, and SOM (serviceable obtainable market) is the share you could realistically win. The market size calculator on this page folds SAM and SOM into one number: how many you could reach.

Start from a group someone has already counted. That could be a type of business in a region, members of a community or forum where the problem comes up, owners of a particular product, or how many people search for the problem each month. A rough number is fine, because the share you can reach moves the answer more than a precise count would.

Assume less than feels right. Reach means the people who will actually hear about you and consider buying, which for a new business with no audience is a small slice. Start at the low end, such as 1 in 100, and raise it only when you have a way to reach more.

There is no single threshold. The market size calculator on this page reads under 100 reachable people as a narrow slice, 100 to 1,000 as enough to build something in your spare time, and over 1,000 as wide enough that reach will not hold you back. Whichever band you land in, how many will pay matters more than how many you can reach.

Put in the one-off price and read the result as total sales if every reachable person bought once.

Start with the people who already have the problem and talk about it, in forums, Reddit threads, reviews of similar products and social media. Look at who they are, what they use now and what they complain about. Draper, a start-a-business app, reads what people are already saying about your idea and helps you work out who the customer is before you build anything.