Total Addressable Market Template for B2B Market Sizing
January 30, 2022
B2B Market Sizing Template
Understanding your total addressable market (TAM, SAM, and SOM) opportunity is much easier when you have a framework and process to follow. We’ve found that the best bottom-up B2B market models follow a specific process that can be applied to most businesses— from small startups to companies preparing to IPO.
The TAM template, included at the link below, will give you a way to size a B2B (business-to-business) market segmented by business size, but you can also modify it to segment by geography, market vertical, or another method relevant to your business.
The template is structured in three sections.
First, take a look at how many potential customers there are in the market. You may want to filter by vertical, geography, buying behavior, or some other characteristic of your market. Here's a list of popular market sizing data options. And of course, the upcoming Scalepath app will help you build an accurate B2B market sizing model, with data at a state, country, and global level.
Next, determine your potential average annual customer value (ACV) by calculating how much is purchased by businesses in the segments you identified above. This includes price, number of seats, or number of locations, combined with any additional revenue sources. Get specific here: if segmenting by business size, be sure to project the different unit economics for each company size. If you have consistent revenue numbers fo each segment, you can use that. If not, data from a proven competitor or a willingness to pay study can fill the gaps.
Your total addressable market is simply the multiplication of number of customers x average customer value.
Finally, layer in assumptions to determine your serviceable addressable market, a portion of the overall TAM that your business can actually service due to size, geo, needs, or buying behavior, and your serviceable obtainable market, a realistic outlook of the target market share you can expect to gain in a set time period. Here's a refresher on the difference between TAM, SAM, and SOM definitions.
If you need more resources to build a model or looking to refine your model further, try the Scalepath market sizing app, which simplifies the process by applying millions of data points to build accurate models based on your specific business context.