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exercise1 min readLesson 6.4

Top-down vs bottom-up forecasting

Go-to-Market · 25 min

Top-down forecasting starts from market size and works down (TAM × penetration = revenue). Bottom-up starts from your capacity and works up (reps × deals × price = revenue). The best forecasts use both methods and reconcile.

Key Takeaways

  • Top-down = market opportunity. Bottom-up = execution reality.
  • Bottom-up is the binding constraint for startups.
  • If they diverge >30%, an assumption is wrong.
  • Present both to investors — shows rigor.