TAM Calculator

Calculates Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM) for new market segments. Uses both top-down (industry reports, macro data) and bottom-up (unit economics, customer counts) methods, then triangulates the results. Identifies data sources, estimates growth rates, and outputs a market sizing report with full methodology. Useful for evaluating new service lines, geographic expansion, or segment targeting decisions.

Prerequisites

agency.config.json at repo root with agency, services, icp, and case_studies sections
Target market definition (at minimum: industry + geography + service type)
WebSearch tool available for market research
Optional: known data points (current revenue, customer count, average deal size)

Phase 0: Intake

Read agency.config.json from the project root.
Extract:
- agency.name -- for contextualization
- services[] -- to understand the agency's current capabilities
- icp.segments[] -- existing market segments for comparison
- case_studies[] -- for average deal size and revenue benchmarks
Accept parameters:
- market_definition -- (required) the target market to size. Object with:
  - industry -- target industry (e.g., "D2C ecommerce", "SaaS", "healthcare")
  - geography -- target region(s): country, region, or global
  - service -- the specific service to size for (e.g., "Shopify CRO", "performance marketing")
  - company_size -- target company size range (e.g., "11-200 employees", "$1M-$50M revenue")
- known_data -- (optional) any data points the user already has:
  - current_revenue -- agency's current annual revenue
  - current_customers -- number of active clients
  - avg_deal_size -- average annual revenue per client
  - win_rate -- percentage of proposals that close
  - market_share_estimate -- rough current market share percentage
- growth_horizon -- years to project. Default: 3
- confidence_level -- conservative, moderate, aggressive. Default: moderate

Phase 1: Market Definition Refinement

Precisely define the market boundaries before sizing. Ambiguity here cascades into unreliable numbers.

Define each boundary explicitly:

Boundary	Question	Example
Industry	What vertical exactly?	"D2C ecommerce brands on Shopify" not "ecommerce"
Geography	Which countries/regions?	"India, US, UK, AU" not "global"
Company size	Revenue range? Employee count?	"$500K-$50M annual revenue, 11-200 employees"
Service scope	What specific service?	"Shopify CRO and optimization" not "marketing services"
Platform	Any platform constraint?	"Shopify only" vs "all ecommerce platforms"
Maturity	Stage of company?	"Post-PMF, Series A-C" not "all startups"

Exclusions (what is NOT in this market):

List specific exclusions: enterprise (500+ employees), pre-revenue, non-English markets, etc.
Clarity on exclusions prevents inflated numbers

Compile:

MARKET DEFINITION:
---
Industry: [specific]
Geography: [countries/regions]
Company size: [range]
Service: [specific service]
Platform: [constraint or "any"]
Maturity: [stage]
Exclusions: [list]
---

Phase 2: Top-Down Sizing

Start from the total market and narrow down. This approach uses industry reports, analyst data, and macro statistics.

Step 1: Total industry size

Use WebSearch to find:

"{{industry}}" market size {{current_year}} report
"{{industry}}" TAM billion {{geography}}
"{{industry}}" global market value
Shopify merchant count {{current_year}}
"{{geography}}" ecommerce market size

Record:

Source name and date
Total market figure
Currency
What the figure includes (important: does it cover your service or the entire industry?)

Step 2: Apply segmentation filters

Narrow the total market using each boundary defined in Phase 1:

Total industry market: $X
  x Geography filter: [% of global market in target region] = $Y
  x Company size filter: [% of companies in target size range] = $Z
  x Platform filter: [% on target platform] = $A
  x Service relevance: [% who need this specific service] = $B
---
TAM (top-down): $B

Step 3: SAM calculation

From TAM, apply the agency's reach constraints:

Language: what % can the agency serve given language capabilities?
Pricing: what % can afford the agency's pricing tier?
Channel access: what % can the agency reach through its channels?

TAM: $B
  x Language reach: [%]
  x Pricing tier fit: [%]
  x Channel access: [%]
---
SAM (top-down): $C

Step 4: SOM calculation

From SAM, apply competitive and capacity constraints:

Competitive intensity: how many competitors serve this segment?
Win rate: historical or estimated close rate
Capacity: how many clients can the agency handle?

SAM: $C
  x Realistic capture rate (based on competition + capacity): [%]
---
SOM (top-down): $D

Document every assumption and filter percentage with reasoning.

Phase 3: Bottom-Up Sizing

Build from unit economics upward. This approach is grounded in the agency's actual numbers.

Step 1: Count target companies

Use WebSearch and data sources to estimate the total number of companies matching the market definition:

number of Shopify stores in {{geography}} {{current_year}}
"{{industry}}" companies {{geography}} {{company_size_range}}
Apollo.io data (if tools.lead_enrichment is configured): search the ICP segment and note total results
LinkedIn search data: companies matching industry + size + geography
Government business registries, industry association data

Record multiple sources and triangulate:

COMPANY COUNT ESTIMATES:
Source 1 ([name]): [number]
Source 2 ([name]): [number]
Source 3 ([name]): [number]
---
Triangulated estimate: [number]
Confidence: [low/medium/high]

Step 2: Estimate serviceable percentage

Not all counted companies are potential customers:

What % actually need this service? (vs. handling in-house or not a priority)
What % have budget for external services?
What % are not already locked into competitors?

Total companies: [N]
  x Need service: [%]
  x Have budget: [%]
  x Accessible (not locked in): [%]
---
Serviceable companies: [M]

Step 3: Apply unit economics

Serviceable companies: [M]
  x Average deal size (annual): $[avg_deal]
---
TAM (bottom-up): $[M * avg_deal]

For SAM:

TAM (bottom-up): $[X]
  x Reachable through agency's channels: [%]
---
SAM (bottom-up): $[Y]

For SOM:

SAM (bottom-up): $[Y]
  x Expected win rate: [%]
  x Capacity constraint (max clients/year): [N clients * avg_deal]
---
SOM (bottom-up): $[Z]

Phase 4: Triangulation

Compare top-down and bottom-up results. Discrepancies reveal blind spots.

Analysis:

Metric	Top-Down	Bottom-Up	Variance	Notes
TAM	$X	$Y	[%]	[explain variance]
SAM	$X	$Y	[%]	[explain variance]
SOM	$X	$Y	[%]	[explain variance]

If variance > 50%:

Identify which assumptions drive the gap
Research the gap: is top-down inflated (common) or bottom-up too conservative?
State the final estimate as a range with confidence level

Final estimates: use a weighted average, typically bottom-up-weighted (60/40) for agency-scale businesses where unit economics are more reliable than industry macro data.

FINAL MARKET SIZING:
---
TAM: $[range] (confidence: [level])
SAM: $[range] (confidence: [level])
SOM: $[range] (confidence: [level])
---

Phase 5: Growth Projections

Project the market forward using available growth data.

Growth rate estimation:

Historical growth: search for CAGR data on the target industry
- "{{industry}}" CAGR {{current_year}} forecast
- "ecommerce" growth rate {{geography}}
Leading indicators: signals that the market is accelerating or decelerating
- New company formation rate in the industry
- VC funding trends in the vertical
- Platform growth (Shopify merchant growth rate)
- Job posting trends (are companies hiring for roles the agency supports?)
Apply growth scenarios:

Scenario	Growth Rate	Assumption
Conservative	[X%] CAGR	Market matures, competition increases
Moderate	[Y%] CAGR	Current trends continue
Aggressive	[Z%] CAGR	Tailwinds accelerate (new regulation, tech shift, etc.)

Projection table:

Year	TAM	SAM	SOM	Notes
Current	$X	$Y	$Z	Baseline
+1
+2
+3

Phase 6: Competitive Landscape

Map the competitive dynamics within the sized market.

Competitor categories:

Category	Description	Market Share Est.
Large agencies	Full-service, premium pricing	[%]
Niche specialists	Focused on specific platform/service	[%]
Freelancers/solopreneurs	Individual experts	[%]
In-house teams	Companies who do not outsource	[%]
Unserved	Companies with unmet need	[%]

Agency positioning:

Where does the agency fit in these categories?
What is the realistic capture potential given positioning?
Which competitor category is the primary displacement target?

Phase 7: Strategic Implications

Translate the numbers into actionable insights.

Market entry assessment:

Factor	Rating (1-10)	Notes
Market size attractiveness		Is SOM large enough to be worth pursuing?
Growth trajectory		Is the market growing fast enough?
Competition intensity		How crowded is the space?
Agency capability fit		Does the agency have the skills?
Go-to-market feasibility		Can the agency reach this market?
Revenue per client		Does the unit economics work?

Recommendations:

Enter this market? (yes/no with reasoning)
If yes: priority level (primary, secondary, experimental)
Suggested go-to-market approach
Key risks and mitigation strategies
Resource requirements (team, tools, budget)

Phase 8: Output

Return structured JSON:

{
  "market_definition": {
    "industry": "D2C ecommerce brands on Shopify",
    "geography": ["India", "US", "UK", "AU"],
    "company_size": "11-200 employees, $500K-$50M revenue",
    "service": "Shopify CRO and optimization",
    "platform": "Shopify",
    "exclusions": ["enterprise 500+", "pre-revenue"]
  },
  "sizing": {
    "tam": {
      "top_down": {"value": 2400000000, "currency": "USD", "methodology": "..."},
      "bottom_up": {"value": 1800000000, "currency": "USD", "methodology": "..."},
      "final": {"value_range": [1800000000, 2400000000], "midpoint": 2100000000, "confidence": "moderate"}
    },
    "sam": {
      "top_down": {"value": 340000000, "currency": "USD"},
      "bottom_up": {"value": 280000000, "currency": "USD"},
      "final": {"value_range": [280000000, 340000000], "midpoint": 310000000, "confidence": "moderate"}
    },
    "som": {
      "top_down": {"value": 5200000, "currency": "USD"},
      "bottom_up": {"value": 4800000, "currency": "USD"},
      "final": {"value_range": [4800000, 5200000], "midpoint": 5000000, "confidence": "moderate"}
    }
  },
  "unit_economics": {
    "total_target_companies": 45000,
    "serviceable_companies": 8500,
    "avg_deal_size_annual": 36000,
    "expected_win_rate": 0.15,
    "max_clients_per_year": 15
  },
  "growth_projections": {
    "cagr_scenarios": {
      "conservative": 0.08,
      "moderate": 0.14,
      "aggressive": 0.22
    },
    "projections": [
      {"year": "current", "tam": 2100000000, "sam": 310000000, "som": 5000000},
      {"year": "+1", "tam": 2394000000, "sam": 353400000, "som": 5700000},
      {"year": "+2", "tam": 2729160000, "sam": 402876000, "som": 6498000},
      {"year": "+3", "tam": 3111242400, "sam": 459278640, "som": 7407720}
    ]
  },
  "competitive_landscape": {
    "competitor_categories": [
      {"category": "Large agencies", "market_share": 0.25, "threat_level": "medium"},
      {"category": "Niche specialists", "market_share": 0.20, "threat_level": "high"},
      {"category": "Freelancers", "market_share": 0.15, "threat_level": "low"},
      {"category": "In-house", "market_share": 0.30, "threat_level": "low"},
      {"category": "Unserved", "market_share": 0.10, "threat_level": "none"}
    ],
    "agency_positioning": "Niche specialist targeting mid-market D2C on Shopify"
  },
  "data_sources": [
    {"source": "Shopify annual report 2025", "data_point": "Merchant count", "reliability": "high"},
    {"source": "Statista ecommerce report", "data_point": "Market size by geography", "reliability": "high"},
    {"source": "Apollo.io search results", "data_point": "Company count in segment", "reliability": "medium"}
  ],
  "assumptions": [
    {"assumption": "30% of Shopify merchants in the size range need external CRO help", "impact": "high", "confidence": "medium"},
    {"assumption": "Average deal size of $36K/year based on agency pricing", "impact": "high", "confidence": "high"}
  ],
  "strategic_recommendation": {
    "enter_market": true,
    "priority": "primary",
    "reasoning": "SOM of $5M is achievable within 2 years given current trajectory. Market is growing at 14% CAGR with an underserved mid-market segment.",
    "key_risks": ["Competition from freelancers on price", "Market concentration in top 3 agencies"],
    "next_steps": ["Validate with 10 prospect conversations", "Build case study in target segment", "Launch targeted content campaign"]
  }
}

Phase 9: Review

Present the market sizing to the user:

Show the market definition with boundaries
Present TAM/SAM/SOM with both top-down and bottom-up figures
Highlight the triangulation and explain any variance
Show growth projections across scenarios
Present competitive landscape
Share strategic recommendation
List all assumptions with confidence levels
List all data sources with reliability ratings
Ask if any assumptions need adjustment

After approval, optionally:

Feed into icp-builder to refine the ICP for the new segment
Feed into blog-researcher to identify content opportunities in the new market
Feed into signal-scanner to start prospecting in the new segment

Example Usage

Trigger phrases:

"Size the market for Shopify CRO in India"
"Calculate TAM for our services in the US D2C market"
"How big is the opportunity for performance marketing for D2C brands?"
"Should we expand into the UK market? Size it for me."
"What is the TAM for Shopify development in Australia?"
"Calculate market size for a new service line"

User: Size the market for Shopify CRO services targeting D2C brands in India and the US
Assistant: [reads config, defines market boundaries, runs top-down analysis with industry data, runs bottom-up with company counts and unit economics, triangulates, projects growth, maps competition, returns full report with strategic recommendation]

User: Should we add performance marketing as a service? What is the market opportunity?
Assistant: [reads config, sizes the performance marketing market for existing ICP segments, compares unit economics to current CRO service, projects growth, assesses capability gap, returns recommendation with market sizing]

tam-calculator

SKILL.mdskills/capabilities/tam-calculator/SKILL.md