What are TAM, SAM, SOM and how to calculate them?

TAM, SAM, and SOM are marketing metrics for assessing the market and product potential:

• TAM (Total Addressable Market) — the total market volume that a product can theoretically target. This is the maximum possible revenue or number of customers in the entire industry.

• SAM (Serviceable Available Market) — the portion of TAM that a company can realistically serve, considering geography, segmentation, sales channels, etc.

• SOM (Serviceable Obtainable Market) — the share of SAM that a company plans to capture in the near future, considering competition and resources.

How to calculate:

1. Determine TAM — for example, by summing all sales in the industry for a year.
2. Identify SAM — the segment of the market accessible to your product (e.g., only a specific region or niche).
3. Estimate SOM — the projected market share you can occupy (e.g., 5-10% of SAM).

These metrics help in planning strategy, budgeting, and forecasting growth.