What it is
TAM, SAM, and SOM are three nested measures of market size that show total opportunity versus what you can realistically capture.
Facts
- TAM (Total Addressable Market): total demand if you had 100% of the whole market.
- SAM (Serviceable Addressable Market): the portion your product and geography can actually serve.
- SOM (Serviceable Obtainable Market): the share you can realistically win in the near term.
- Two approaches: top-down (industry reports) and bottom-up (customers x price). Investors often give more weight to a defensible bottom-up model.
Who it's for
Founders raising money or deciding whether a market is big enough to build a venture-scale business.
How it helps you
Market sizing tests whether the opportunity is large enough to matter and grounds your revenue projections in credible, defensible numbers.
Caveats
Inflated top-down TAMs ('1% of a huge market') are a red flag to investors. SOM, the near-term obtainable slice, is what actually informs your plan.
Conclusion
TAM/SAM/SOM sizes the prize and, more usefully, what you can realistically win. Build it bottom-up so the numbers survive investor scrutiny.
