TAM — Total Addressable Market
The total global revenue opportunity if you achieved 100% market share with no constraints. TAM is useful for establishing category size and attractiveness, but serves as a theoretical ceiling — no company achieves full TAM capture.
SAM — Serviceable Addressable Market
The portion of TAM your product or business model can actually serve, given your current capabilities, geographic reach, pricing, and target customer profile. If your CRM targets mid-market English-speaking companies under 500 employees, your SAM is the global CRM TAM filtered to that segment.
SOM — Serviceable Obtainable Market
The realistic revenue you can capture within your SAM over a 3–5 year planning horizon, accounting for competition, sales capacity, marketing budget, and growth rate. SOM is the most critical metric for business planning and investor credibility.
Worked Example: B2B SaaS Project Management
- TAM: Global project management software market — USD 9.8B
- SAM: SMB segment, English-speaking markets, 10–200 person teams — USD 2.1B
- SOM: Realistic 3-year capture at current growth trajectory — USD 85M
Frequently Asked Questions
Top-down or bottom-up analysis?
Use both. Top-down (from syndicated market research reports) establishes TAM and SAM efficiently. Bottom-up (from sales capacity, conversion rates, and average contract value) establishes SOM credibly. Investors find bottom-up SOM far more convincing than percentage-of-TAM assumptions.
What is a realistic SOM as a percentage of SAM?
For early-stage companies: 1–5% of SAM in year 3 is typically realistic. For growth-stage companies with strong GTM execution: 5–15%. Claims above 20% of SAM require extraordinary justification.
