Marketers, business owners, and product teams use TAM, SAM, and SOM calculations to assess market viability and potential. TAM (Total Addressable Market) helps determine the overall market size for a product or service. SAM (Serviceable Addressable Market) narrows this down to the portion a specific business can realistically reach. SOM (Serviceable Obtainable Market) further refines this to the portion the business can likely capture. Ignoring these calculations can lead to poor investment decisions, unrealistic goals, and potential burnout.

TAM, SAM, and SOM are acronyms for three metrics to describe the market your organization operates in — Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market.

TAM (Total Addressable Market)

TAM (Total Addressable Market) represents the total potential demand within a specific market. It’s the maximum revenue a business could generate if it captured the entire market for its product or service. Calculating TAM can seem daunting, but it’s a key metric for understanding market potential.

SAM (Serviceable Addressable Market)

SAM Definition: The size of the TAM you can reasonably target as you build your audience.

Practical limitations like business model, specialization, or geographic reach restrict a company’s ability to serve the entire TAM. SAM (Serviceable Addressable Market), a subset of TAM, represents the portion of the market a business can realistically target and serve. Focusing on SAM helps create more accurate revenue and audience projections.

SOM (Serviceable Obtainable Market)

SOM Definition: The size of the SAM you can potentially convert.

Capturing an entire market is highly unlikely, even with limited competition. Therefore, SOM (Serviceable Obtainable Market) is a critical metric. SOM represents the portion of the SAM (Serviceable Addressable Market) a business can realistically expect to convert into customers. This helps define achievable short-term growth targets and informs competitive strategy.

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