Market Sizing
The Fermi-style discipline of estimating an addressable market from the build-up: count the population of potential customers in the relevant reference class, estimate the penetration rate (what fraction find the product relevant), estimate the average annual spend per customer, multiply. The build-up produces an order-of-magnitude TAM bound that can be compared against a memo's headline TAM claim; meaningful divergence (3x or more) is either the analyst knowing something the reader does not (worth digging into) or stretching to support a larger revenue opportunity than the market structure actually allows (worth pushing back on).
Lessons that use this term
Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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