A market you can actually count

Why it exists

Most govtech market sizing works top-down: take a total for state and local IT spend, or multiply residents by a per-capita price, and call the result a TAM. Both approaches miss the thing that actually decides who buys software and what they pay, which is the agency's budget. A school, water, or fire district can serve a large population on a small budget, and a mid-sized city can run a budget many times larger than its headcount would suggest.

Local government is also unusually knowable. Every one of the country's 86,000-plus local governments reports its finances to the Census Bureau, so instead of estimating the market you can count it, agency by agency. That is easier than it sounds. What makes it harder is the shape of what you find: most agencies are small, and most of the money sits with a few thousand of them. A credible number has to account for both.

How it works

The calculator walks through three steps, and every input is yours to change. Scenarios can be shared as a link, saved as a report or CSV, or printed for a deck.

Under the hood the math is deliberately simple, so you can explain it to an investor in a sentence:

Price = base × (median tier budget ÷ $100M)^exponent

TAM is governments × price, summed across tiers: the ceiling if every government bought. SAM is TAM × serviceable share, the slice of the market that will buy this category of software from you or a competitor. An exponent below one means larger agencies pay more in dollars but less as a share of their budget, which matches how enterprise public-sector deals tend to price. What share of SAM you win is a go-to-market question, so the calculator stops there on purpose.

The data

Every figure comes from the 2022 Census of Governments, Finance component, using the individual-unit file that covers all 86,472 U.S. local governments: cities, counties, townships, school districts, and special districts. Each government's budget is its total expenditure for fiscal 2022, including current operations, capital outlay, interest, and intergovernmental payments.

Governments are grouped into budget tiers from $1M to over $2B, and each tier's price is set from its median budget. The 44,084 governments spending under $1M a year, mostly small special districts and townships, are left out of the calculator because they are rarely realistic software buyers. They still appear in the composition table on the main page so you can see what was excluded.

What it won't tell you

A market size is a starting point, not a forecast. Government deals typically take six to eighteen months to close, prices under about $25K rarely justify a dedicated sales rep, and the largest agencies buy through formal RFPs with long memories. State agencies and federal buyers aren't included, and budgets move year to year. Use the numbers to decide where to focus, then pressure-test them against real pipeline.

Who built it

The calculator was built by Abhi Nemani through ethoslabs. Abhi has spent more than fifteen years on both sides of the govtech table: helping build Code for America, serving as Chief Data Officer of Los Angeles and Chief Innovation Officer of Sacramento, and leading product strategy at Euna Solutions, a SaaS business serving more than 3,000 public agencies. Through ethoslabs, Abhi has advised civic startups, foundations, and investors on exactly this question of how big the market really is.

If you want the longer argument behind the method, read GovTech Market Sizing in the Civic Technology Academy. If you would rather have help applying it to your product, pipeline, or diligence, that is what the consulting practice is for.