Exactly How Much Value Does Your Company Generate? The Math:

If you've read Joe's article on consumer surplus and why it matters, but you want more information on the math, you're in the right place.

When we review applications, we pay special attention to the question that asks how much consumer surplus your startup generates. It's one of the questions that really helps us determine whether we think you'll be a unicorn, and it is important to us that you've thought the question through, so don't overlook it if you're applying to Sputnik ATX!

In order to get started, you'll have to first research these two things and save your sources:

• The $ amount a customer is willing to pay. You can make an educated guess about this number based on competitors, the cost of the problem you are solving to your customer, and/or what their current solutions are to that problem.
• The # of customers in total addressable market

Here's how to do the actual calculation:

where A = $ amount a customer is willing to pay

B = $ amount a customer pays for your product

C = total addressable market (# of customers, not a dollar amount)

Once you find the answer, it's important to include your calculation + sources / assumptions that helped you arrive at the numbers for the amount the customer is willing to pay and the TAM, too.