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.
- 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.
- 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.
This article builds on content developed by the Martin Trust Center for MIT Entrepreneurship for MIT's Orbit Knowledgebase and is licensed under CC BY-NC-SA 4.0.