Computing a TAM in Edtech is difficult. In for-profit businesses, it is relatively easy to calculate the TAM (total buyers x percentage who will buy x average selling price). In EdTech this doesn’t work because buying decisions are constrained by several factors: (a) a budget that grows incrementally and doesn’t grow based on need or potential ROI, (b) freeing up the budget may require displacing an existing product, (c) you are up against competitors in your market segment AND other EdTech tools at large.
Why does this matter? It matters a lot for smaller EdTech companies. I believe that there are far fewer Edtech buyers who will purchase in any given year because of the aforementioned budget constraints. To make matters worse, 80% of B2B vendors have a short list of vendors in mind and 90% of buyers will choose a familiar vendor. The good news is that smaller EdTech companies can build brand awareness through a smart social media presence that builds credibility and trust. The bad news is that brand building is a slow process that will likely take at least a year.
