After brainstorming ideas from section, we decided to focus on the market for a new feature supplementing EduSphere’s learning content with AI-powered, hands-on projects tailored toward standing out in the increasingly competitive college admissions and internship application processes. These projects would be custom-made based on a student’s goal learning outcomes, and our feature would provide advanced features to walk students through real-world, portfolio-building projects and provide on-demand feedback based on the criteria that colleges/employers value. Application-based projects are not only sought by secondary school students (EduSphere’s current market), but also university students (both online and in-person) and educators; this expands our target audience and serves as the basis for our TAM, SAM, and SOM.
Based on the calculations below, our TAM is $3.9B, our SAM is $500M, and our SOM is $53.75M.
We calculated TAM based on the total number of secondary school students, higher education educators, and university students in the United States; we then multiplied this user base by the average revenue earned per user. Currently, EduSphere generates $100/user/year in revenue based on the fact that there are 200,000 paying users and a total annual revenue of $20M. There are 4M higher education educators; 8M online university students; 10M in-person university students (18M total university students – 8M online university students = 10M in-person); and 17M secondary school students in the United states. Thus, our total TAM user-based is 4M + 8M + 10M + 17M = 39M users. Finally, we calculate TAM through the calculation of 39M users * $100/user/year = $3.9B/year.
We then narrowed down our TAM for our SAM by estimating the proportion of our TAM user base that would be interested in using and paying for this feature. Based on this article which estimates the number of educators willing to pay for new technologies enhancing classroom learning, we estimate that ~12.5% of our educator TAM (4M) would be willing to pay; thus 4M * 12.5% = 500,000 educators willing to pay. Out of the 8M total online university students, we are targeting those who are pursuing online university in order to access higher-paying jobs. Thus, we estimated that ~20% of the 8M online university students would be willing to pay more on top of their tuition for our project-based learning service (1.6M online university users). Out of the 10M total in-person university students, we deduced that mostly freshmen and sophomores (~ 50% of the student body) would need project-based experience to enhance their resumes for internships. Out of these 5M freshmen and sophomores, we estimated that 15% would be pursuing technical subject matters necessitating project-based experience; thus approximately 750,000 in-person university students would pay for our service. Finally, out of the 17M secondary school students, we found that 70% want to go to college, and of that 70%, 35% are highly engaged in extracurricular activities. Of those highly engaged in extracurricular activities, we estimated that 50% would take the extra initiative to pursue projects that would stand out in the elite college application process. Thus, we calculated that 17M * 70% * 35% * 50% = 2.1M secondary students would be willing to pay for our service. Finally, to calculate our SAM, we added (500,000 educators) + (1.6M online university students) + (750,000 in-person university students) + (2.1M secondary school students) = approximately 5M total users * $100/user/year = $500M/year for our SAM.
Finally, we calculated our SOM based on our current and projected conversion rates and revenue baseline. Currently, we have 4M total users, a 5% conversion rate, and $20M in total revenue. If we introduced this project feature, we estimated that we could increase conversion from 5 to 10%; increase revenue per user to $125/user/year by offering advanced customization features; and increase our total customer base from 4M to 4.3M. Using these projected values, we calculated our SOM to be: 4.3M * 10% = 430,000 paying users * $125/user = $53.75M.
