Market Potential (TAM/SAM/SOM)

Calculating the Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) helps quantify the market potential for your product or service. This enables you to set realistic goals and develop appropriate strategies to reach your target audience.

Let's understand each of these concepts:

Total Addressable Market (TAM)

TAM represents the total market available for your product or service, without restrictions. It's the total market size if you could sell to all possible customers.

Practical example: Imagine you are launching a fitness app. The TAM would be the total number of people in the world who could benefit from a fitness app, regardless of their location or preferences.

Serviceable Available Market (SAM)

SAM is the portion of the TAM that you can actually serve with your product or service, considering factors such as target audience, geographical location, product features, and operational capacity.

Practical example: For the same fitness app, the SAM would be the number of people interested in the topic, who speak the language in which the app is available, and have access to compatible smartphones. If your app is in Portuguese, your SAM could be all Portuguese-speaking people who use smartphones.

Serviceable Obtainable Market (SOM)

SOM is the portion of the SAM that you can capture, taking into account your projected market share. It is your initial and realistic target market, considering competition and your operational and marketing capabilities. This result will show your potential annual revenue, assuming everything you execute goes as expected.

Practical example: For the fitness app, the SOM would be the number of people you can realistically capture, considering your marketing strategies, sales capacity, and existing competition. For example, if you estimate capturing 5% of the SAM, that will be your SOM.