Total Addressable Market (TAM)
- TAM (Total Addressable Market): Represents the total market demand for a product or service.
- Defines the maximum potential revenue a business can generate by capturing 100% of the market.
- Helps assess market size, revenue potential, and scalability of a business or product.
TAM Calculation
# of Customers in a Market X Annual Value per Customer
- Count the total number of customers in the market
- Identify the average annual revenue of each customer
- Multiply
Serviceable Addressable Market (SAM)
- SAM (Serviceable Addressable Market): A subset of TAM that represents the portion of the market you can reasonably target.
- Helps identify the addressable potential of a specific market segment.
- Useful for estimating realistic revenue and audience targets.
SAM Calculation
Target Segment of TAM X Annual Value per Customer
- Count up all the potential customers that would be a good fir for your business
- Find the average annual revenue of these types of customers
- Multiply
Serviceable Obtainable Market (SOM)
- Serviceable Obtainable Market (SOM): The portion of SAM you can realistically convert into customers.Represents the number of customers likely to benefit from your product or service.
- How many customers would realistically benefit from buying your product or service.
SOM Calculation
Last Year's Market Share X This Year's SAM
- Divide your revenue from last year by your industry's SAM from last year
- This percent is your market share from last year
- Multiply
