Glossary

TAM vs. SAM

Definition

TAM (Total Addressable Market) and SAM (Serviceable Addressable Market) are key market sizing concepts used by startups and investors to estimate business potential.

  • TAM (Total Addressable Market): The total demand for a product or service if every potential customer were to buy it. It represents the largest possible market opportunity.
  • SAM (Serviceable Addressable Market): The portion of TAM that a company can realistically target and servebased on its business model, capabilities, and geographic reach.

Understanding TAM vs. SAM helps businesses develop go-to-market strategies and assess revenue potential.

Why is TAM important for startups?

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TAM helps investors and founders estimate market potential, guiding business strategy and investment decisions.

How does SAM differ from TAM?

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SAM is a subset of TAM, representing the realistic market share a company can capture based on product, location, and resources.

How do startups calculate TAM and SAM?

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Startups use industry research, competitor analysis, and customer segmentation to estimate TAM and narrow it down to SAM.

What is the relationship between TAM, SAM, and SOM?

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TAM: Total market demand SAM: Realistic portion of TAM the company can serve SOM (Serviceable Obtainable Market): The market share the company expects to actually capture

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