TAM vs SAM vs SOM
These three market-sizing figures narrow from the theoretical maximum down to what a business can realistically capture. Investors expect all three, not just the biggest, most impressive number.
TAM
TAM (total addressable market) is the revenue you would earn if every customer in the market you defined bought from you. It is a ceiling, not a sales forecast.
SAM
SAM (serviceable addressable market) is the part of TAM your business can actually reach, given its location, hours, language, licences and business model.
SOM
SOM (serviceable obtainable market) is the part of the market you can actually win with today's team, budget and hours. In a small business, capacity sets it.
Total demand for a product category if everyone who could buy it did
The portion of TAM reachable given your business model and geography
The portion of SAM you can realistically win given competition and resources
Largest
Middle
Smallest, most realistic
Showing the size of the opportunity
Showing a realistic addressable slice
A realistic sales plan for the next few years
| Definition | Total demand for a product category if everyone who could buy it did | The portion of TAM reachable given your business model and geography | The portion of SAM you can realistically win given competition and resources |
|---|---|---|---|
| Typical size | Largest | Middle | Smallest, most realistic |
| Used for | Showing the size of the opportunity | Showing a realistic addressable slice | A realistic sales plan for the next few years |