SAM (Serviceable Available Market)

TAM, SAM and SOM are nested. TAM (Total Addressable Market) is the whole market for the category. SAM is the slice of TAM you could serve with what you sell today and where you sell it. SOM (Serviceable Obtainable Market) is the share of SAM you can realistically win in the next few years, given competition, sales capacity and time. You will see SAM expanded as both "Serviceable Available Market" and "Serviceable Addressable Market". They mean the same thing. How to calculate SAM (bottom-up): SAM = number of customers you can actually serve × average annual revenue per customer 1. Start from the customers in your TAM. 2. Remove everyone your product cannot sell to today: the wrong geography, language, company size, platform or regulatory requirements. 3. Multiply the customers who are left by what one of them pays you in a year. Worked example: a scheduling tool for service businesses. - TAM: 2,000,000 service businesses worldwide × €600 a year = €1.2 billion. - Constraints today: English only, integrates with US payment processors only, built for teams under 20 people. That leaves 250,000 businesses. - SAM: 250,000 × €600 = €150 million. - SOM: if a realistic three-year target is 2% of SAM, that is 5,000 customers, or €3 million a year. SAM matters more to founders day to day than TAM does. TAM tells investors a ceiling exists; SAM tells you where to spend the next quarter of go-to-market effort. A large TAM with a small SAM is normal early on, and the plan for growing SAM (new segments, geographies or use cases) is a real part of the roadmap, not just a slide.

A scheduling tool's TAM is every business that books appointments, worldwide. Its SAM, given it currently only integrates with US payment processors and is English-only, is US-based service businesses, a much smaller but addressable slice it can actually sell into today.