ethoslabs
GovTech Market Sizing Calculator
GovTech Valuations: Easier and Harder than You Think
Easier, because every local government publishes a budget, so the market is countable. Harder, because most agencies are small and most of the money sits with a few thousand. And most sizing gets it wrong by starting from population: a school, water, or fire district can serve a fraction of a city's residents and outspend it. Budget, not headcount, determines what an agency can buy — so this tool tiers every government by budget and builds your TAM and SAM on real Census data.
The shape of the market
Most agencies are small. Most of the money isn't. Plan for both. — 2022 Census of Governments
Step 1
Set tiered pricing & serviceable share
Start with what a mid-sized agency would pay; the curve prices every other tier for you — bigger agencies pay more in dollars but less as a share of budget. Then set the serviceable share: the fraction of each tier that will realistically buy software like yours from anyone over your planning horizon. It's the honest lever. Not today's penetration, not your market share, and it climbs with size because larger agencies have the staff, budget, and peers to adopt. Drag, edit, and watch the totals move.
Price for a $100M-budget agency
All tiers scale from this base.
| Budget tier | Governments | Median budget | Price ✎ | Serviceable share ✎ drag to adjust |
|---|
Step 2
Revenue by tier
This is where the story usually changes. The tiers with the most governments rarely carry the most revenue, and the top tier is smaller than it looks once you price it the way those agencies actually buy.
| Budget tier | Governments | Price | TAM | Serviceable share | Governments in reach | SAM |
|---|
Step 3
Total TAM & SAM
Two numbers you can put in a deck. TAM is the ceiling; SAM is the market that will actually buy this kind of product. What you win of it is your go-to-market's job, not this tool's.
Before this goes in a pitch: government deals take six to eighteen months to close, prices under about $25K rarely justify a sales rep, and the largest agencies buy through formal RFPs with long memories. The market is real. The path through it is not short — which is exactly why a defensible number matters.
TAM = governments × price, summed across tiers: the ceiling if every government bought. SAM = TAM × serviceable share: the part of the market that will realistically buy this category of software, from you or a competitor. Your own capture of SAM is a separate question — your go-to-market, not the market. Price = base × (median tier budget ÷ $100M)exponent, so larger agencies pay more in dollars but less as a share of budget.
Data. Every figure in the tier table is computed from the 2022 Census of Governments, Finance component — the individual-unit file covering all 86,472 U.S. local governments. Each government's budget is its total expenditure (current operations, capital outlay, interest, and intergovernmental payments) for fiscal 2022. The 44,084 governments with expenditure under $1M — mostly small special districts and townships — are excluded from the calculator as not realistically addressable. Read the reasoning in GovTech Market Sizing.
What's in each tier
Every local government in the 2022 Census, by budget tier and type. The calculator uses the rows from $1M up.
| Budget tier | Governments | Cities | Counties | Townships | School districts | Special districts |
|---|---|---|---|---|---|---|
| Under $1M | 44,084 | 7,987 | 48 | 11,762 | 374 | 23,913 |
| $1M – $5M | 16,471 | 4,832 | 237 | 2,408 | 2,074 | 6,920 |
| $5M – $25M | 14,083 | 3,560 | 1,013 | 925 | 5,422 | 3,163 |
| $25M – $100M | 8,007 | 1,784 | 1,000 | 424 | 3,813 | 986 |
| $100M – $500M | 3,205 | 754 | 523 | 145 | 1,488 | 295 |
| $500M – $2B | 513 | 132 | 131 | 3 | 159 | 88 |
| Over $2B | 107 | 32 | 48 | 0 | 14 | 13 |