HubSpot Guide to Market Sizing
HubSpot style market sizing helps you estimate how big your opportunity really is, so you stop guessing and start planning with data-backed forecasts.
Using a structured approach to market size, you can answer key questions: How much demand exists, how many potential customers are out there, and how much revenue you can realistically capture.
This guide adapts the methodology from the original HubSpot market size article at HubSpot's marketing blog and turns it into a clear, repeatable process.
What Is Market Size?
Market size is an estimate of the total demand for a product or service in a defined segment over a specific period, usually one year.
It typically answers two numbers:
- How many potential customers exist (volume)
- How much revenue they represent (value)
Understanding market size helps you decide whether a market is worth entering, how to position your offer, and how aggressively to invest in marketing and sales.
Key Terms in the HubSpot Market Size Approach
Before you run the numbers, clarify a few core concepts used in the HubSpot framework.
Total Addressable Market (TAM)
TAM is the full revenue opportunity if you achieved 100% market share for a specific solution in a defined segment.
In practice, TAM is a strategic upper limit, not a short-term goal.
Serviceable Available Market (SAM)
SAM is the portion of the total addressable market that you can serve with your current business model, capabilities, and geographic reach.
This is the "realistic universe" your product or service can actually reach.
Serviceable Obtainable Market (SOM)
SOM is the share of the serviceable available market you can reasonably capture over a defined time frame, based on competition, budget, and resources.
SOM is often the most useful number for short- and medium-term planning.
Step-by-Step HubSpot Style Market Sizing
Below is a practical process closely aligned with the original HubSpot tutorial but adapted for quick execution.
Step 1: Define Your Market Clearly
Write a one-sentence definition that captures:
- Target customer type (e.g., US B2B SaaS startups)
- Problem you solve
- Main product or service used to solve it
Be specific. Vague definitions produce vague numbers.
Step 2: Choose a Top-Down or Bottom-Up Method
The HubSpot article explains two main approaches. You can use one or combine both.
Top-Down Market Sizing
Top-down sizing starts with broad industry or category data and narrows it down to your segment.
Typical steps:
- Find industry-wide revenue or customer counts from reports, government data, or trade associations.
- Filter by geography, company size, or other qualifiers.
- Apply realistic assumptions to estimate your target segment.
This is fast but often less precise because it relies heavily on assumptions.
Bottom-Up Market Sizing
Bottom-up sizing starts from your actual pricing, usage levels, or sales performance, then scales up.
Typical steps:
- Define your standard pricing model or average order value.
- Estimate the number of potential buyers or units within your segment.
- Multiply potential buyers by average revenue per buyer.
Bottom-up estimates are usually more actionable because they connect directly to your business model.
Step 3: Calculate Volume (Number of Customers)
To estimate volume, identify how many organizations or individuals fit your target criteria.
Sources you can use, similar to those suggested in the HubSpot content, include:
- Government databases and census data
- Industry and analyst reports
- Trade associations and chambers of commerce
- Professional networks and directories
Filter the raw numbers by factors such as region, company size, or income level until they match your target market definition.
Step 4: Calculate Value (Revenue Potential)
Once you know how many potential customers exist, estimate revenue using a simple formula:
Market value = Number of customers × Average revenue per customer per year
To make this realistic, base your average revenue per customer on:
- Current prices or subscription tiers
- Expected purchase frequency
- Average contract value or order size
Run at least three scenarios: conservative, expected, and aggressive. This mirrors the spirit of the HubSpot approach, where scenario thinking improves planning.
Step 5: Translate Into TAM, SAM, and SOM
Using the numbers above, structure your opportunity into three layers.
- TAM: Entire market, including segments you may not reach yet.
- SAM: The subset aligned with your current product, channels, and geographies.
- SOM: The share of SAM you believe you can win over a 1–5 year period.
Document the assumptions behind each layer so you can refine them as new data arrives.
HubSpot Style Example of Market Sizing
Here is a simplified example echoing the structure from the HubSpot resource.
- You define your market as "project management software for small digital agencies in North America."
- You find a report showing 150,000 small digital agencies in the region.
- You estimate that 80% use or plan to use project management tools, so potential buyers = 120,000.
- Your average revenue per customer is $1,200 per year.
Now calculate:
- TAM: 120,000 × $1,200 = $144,000,000 per year.
- SAM: You target only agencies with more than five employees, which are half the total, so SAM ≈ $72,000,000.
- SOM: With your current budget and competition, you expect to win 3% of SAM over three years, or about $2,160,000 annually.
This follows the logic promoted in the HubSpot framework: start broad, then narrow to a realistic goal.
Using Your Market Size to Make Better Decisions
Once you have clear estimates, use them to guide strategic choices across product, marketing, and sales.
Prioritize Segments and Channels
Compare market size across segments by geography, industry, or company size. Focus on those with the best mix of:
- Sufficient market value
- Reasonable competition
- Clear need for your solution
This is aligned with how HubSpot emphasizes prioritization in go-to-market planning.
Set Revenue and Pipeline Targets
Use SOM to anchor realistic revenue goals, then work backwards into pipeline and lead targets:
- Start with annual revenue goal aligned with SOM.
- Divide by average deal size to get required deals.
- Apply your close rate to estimate opportunities needed.
- Translate opportunities into required leads by channel.
This converts market size into a practical sales and marketing roadmap.
Tools and Resources to Support Your Analysis
While the original HubSpot article highlights using public data and simple spreadsheets, you can also enhance your process with specialized tools.
- Keyword and search volume tools to gauge demand.
- Firmographic databases for B2B market counts.
- Analytics platforms to validate real behavior and interest.
If you want hands-on help applying a HubSpot informed approach to your own funnel, you can work with growth specialists such as Consultevo, who focus on performance-driven marketing strategy.
Next Steps for Applying This HubSpot Framework
To put this into practice right away:
- Write a one-sentence definition of your target market.
- Choose either a top-down or bottom-up starting point.
- Collect at least two data sources for volume estimates.
- Calculate conservative, expected, and aggressive market value.
- Outline your TAM, SAM, and SOM and the key assumptions.
Revisit your numbers regularly as you learn from customers, new data sources, and your own sales performance. This iterative, data-driven mindset lies at the core of the HubSpot approach to market sizing and growth planning.
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