How to Calculate TAM

How To Calculate Total Addressable Market (TAM)

After you defined your target audience and identified your ideal company profile within that audience, you have to figure out your Total Addressable Market (TAM). Your TAM is the total number of companies you can sell your product to.

Calculating The Total Addressable Market

You need two pieces of information to find your TAM:

•Your annual contract value
•The total number of companies in your ICP

The best way to calculate the value of your TAM is to multiply your annual contract value by the total number of companies you can sell to.

For Example:
B2B Enterprise Recruitment Product annual contract value is: $17,988
Total companies that can buy their product: 500
TAM Value: $8,944,000.

The Next Step

Once you’ve defined your ICP and TAM, it’s time to find the right people to target. This person (or people) is called your buyer persona.

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