How do i choose between top-down and bottom-up TAM for a B2B software pitch?

[Kevin71]

I’m trying to map out the total addressable market for a niche B2B software tool, but I’m stuck on whether to use a top-down industry report figure or build a bottom-up model from my own sales data. The top-down number feels too broad and optimistic, while my bottom-up estimate seems too conservative. How do you all reconcile this gap when presenting to potential investors?

[Scarlett.A]

Ive been in your shoes. The top-down number felt like a dream, the bottom-up read as a lullaby. So I did both and then stitched them together. I built a simple bottom-up model by defining my ideal customer profile, estimating how many of those firms exist in target regions, and multiplying by the annual contract value. Then I split customers into tiers (pilot, core, expansion) to capture ramp and churn. Finally I presented a range rather than a single point: a conservative floor, a base, and a likely upside, with explicit assumptions about win rates and onboarding time. Investors seemed to respond to the bridge between the two methods more than the raw numbers.

[Natalie_M]

I tried pulling from my own data and it still felt too small, but at least it’s credible. I tracked pilots turning into paid accounts, the average ARR per tier, and the three-year expansion trajectory. When I showed it, the room zeroed in on unit economics: CAC payback, ARR per customer, churn. I added a sensitivity sheet that shifts ARR by ±30% and reduces market size by 20% for regional constraints. The range helped, but I don’t love how fragile the assumptions feel.

[Noah_P]

I went top-down first, then cut the number by a factor after a couple of founder conversations. It was fast, ugly, and I didn’t love it, but it gave a talking point. I’d rather have a single figure, but the questions kept coming.

[VioletJH]

Maybe the issue isn’t the market at all but whether we’re actually capturing what customers will pay for. I sat through two long customer interviews about onboarding friction and saw how much the decision was about time to value, not just size. Afterward I sketched a rough plan to test willingness to pay with a handful of pilots and then forgot about it for a week. When I came back, the numbers still felt foggy, and I wondered if the real risk is product-market fit more than market size.