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: a specialty coffee brand in Pakistan
Pakistan's population is roughly 241 million. If ~12% are urban adults in your target cities who drink coffee, that's about 29 million potential customers. At an average spend of $40 per year on coffee, TAM is about $1.15 billion. If delivery and your brand can realistically reach 40% of them, SAM is about $460 million. Capturing a 2% share over three years gives a SOM of about $9.2 million — comfortably enough to build a real business on, which tells you the idea deserves proper research.
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.