How do I estimate TAM if there is a HUGE range in what customers will pay?

If you are having difficulty estimating TAM because there is a huge range in the expected amount your users will pay - there are two possible reasons.

  1. You have a wide range of product offerings each with different price points. If you are just getting started - that's a problem with focus. You probably need to prune the offerings and really find one solution that will delight your target market - and stick with that.
  2. You have a wide range of customers who differ wildly in their ability and willingness to pay. If that is the case, that is not a problem with the TAM estimation process, but is a symptom of you not having picked your beachhead market. Go back to the segmentation phase and review which market segment to go for first - define it tightly and the rest will follow.

 

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