Market Potential (TAM/SAM/SOM)
This exercise sizes your market using the TAM, SAM, and SOM methodology—three numbers that answer different questions: how big is the market, how much of it can you actually serve, and how much of it can you realistically capture.
What It's For
“Our market is huge” doesn't help anyone make decisions. TAM, SAM, and SOM force you to start with a large number (the entire market) and narrow it down with realistic criteria until you arrive at a number you can actually pursue in the coming months. It's this last number—the SOM—that should guide your sales targets, not the TAM.
The Three Numbers
- TAM — Total Addressable Market: The size of the market if absolutely every potential customer bought from you. Calculated from the population in your coverage area, the estimated percentage of potential customers, and the average annual spend per customer.
- SAM — Serviceable Available Market: The portion of the TAM that your business can practically serve—considering your operational capacity, channels, and positioning. It's a percentage of the TAM, adjustable with a slider control.
- SOM — Serviceable Obtainable Market: The realistic portion of the SAM that you can capture in the short term. The page suggests three references (Conservative, Moderate, Optimistic) to help you calibrate this percentage instead of guessing.
At the end, a "Funnel Summary" shows the three numbers side-by-side, in value ($) and number of customers, making it clear how much the market funnels down from TAM to SOM.
How to Fill It Out
In the TAM block, enter the population in your coverage area, the percentage of potential customers within it, and the average annual spend per customer—the TAM in dollars and the number of potential customers are calculated automatically. For SAM, adjust the percentage of the TAM you consider serviceable using the slider control. For SOM, choose from the three percentage references or adjust manually, always visualizing how many customers and what revenue this represents.
At the top of the page, the Segment indicator shows how many customer segments are considered in this calculation (the same segment base used in other market exercises).
AI Support
Each block has its own AI button: Suggest with AI in TAM and Generate filters with AI in SAM propose starting values based on the rest of your plan—review the suggested numbers before accepting, as they are a starting point, not a definitive calculation for your business. The Val's Insight button, at the top of the page, opens an analysis from Val specifically about the market potential numbers you have already filled in.
Tips
- Don't treat TAM as a goal—it serves to size the market, not to promise results.
- Review SOM honestly: it's common to overestimate how much can be captured in the first few months of operation.
- If the numbers here change after adjusting Personas or Competitor Analysis, go back and recheck TAM/SAM/SOM—they depend on who you consider a "potential customer."
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