1. Ideation
Approximating Market
Approximating Market
Calculating Annual Recurring Revenue (ARR) 📈
Performing an initial bottom-up analysis of your annual recurring revenue can give you a good picture of your business’ future revenue based on your market size and monthly pricing plan. This quick market sizing calculation will help you see if the potential rewards are worth the big investments of your own time and money you put into building any venture.
Note: The numbers below are examples—enter in your own numbers and Coda will calculate your projected MRR and ARR for you!
Estimating TAM SAM SOM
Market
# of people
Monthly Pricing Plan
Monthly Recurring Revenue
Annual Recurring Revenue
1
TAM: Total Addressable Market
10,000,000
$9.99
$99,900,000
$1,198,800,000
2
SAM: Serviceable Addressable Market
500,000
$9.99
$4,995,000
$59,940,000
3
SOM: Serviceable Obtainable Market
100,000
$9.99
$999,000
$11,988,000
There are no rows in this table
🤑 Your product’s estimated MRR is$999,000and ARR is$11,988,000
$999,000
$11,988,000
Depending on how large of a scale you want your product to achieve, determine whether these revenue goals are both reachable AND sustainable for you. It is okay to not have a venture-backable, multi-$B business. You don’t need venture capital to create a successful product. Typical SaaS products should aim for +80% margins according to most VCs.
Understand the scope of your potential product idea’s market and proceed onto if you are still convicted to pursue this problem! If not, go back to and start again.
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