How market sizing actually works (and where people go wrong)
There are two ways to size a market. Top-down starts with a published industry figure — "the global coffee market is worth $500 billion" — and shrinks it until it fits your idea. It reads impressively and proves almost nothing, because the number never had anything to do with your city, your price or your customers.
Bottom-up starts from people: how many buyers could realistically purchase from you, multiplied by what they'd pay per year. It's harder work and far more honest — which is why investors push founders toward it. This calculator does the bottom-up version.
Worked example: an online course for freelance designers
Illustrative assumptions, not researched market facts: suppose you identify 100,000 freelance designers worldwide, and 20% fit your course's topic and budget. At $100 per buyer per year, the total market (TAM) is $2 million. If your languages and channels reach 50% of those buyers, the reachable market (SAM) is $1 million. Winning 5% of that reachable market gives a planning estimate (SOM) of $50,000 per year. This does not prove demand — verify the buyer count, price and conversion assumptions first.
Try the same exercise for a niche that only reaches 50,000 people at a $30 annual spend: SAM of $1.5 million and a 5% capture leaves a $75,000 business. Not dead on arrival — but a very different company than the pitch imagined. That's the point of the exercise: size it before you build it.