Total addressable market (TAM)

Total addressable market is the full size of the opportunity for a product if it reached every potential buyer with no competition or constraints. It is the outermost circle of market sizing, and it answers a simple question: how big could this realistically get. TAM is usually paired with two narrower figures. SAM, the serviceable addressable market, is the slice of TAM you can actually reach given your product, geography, and business model. SOM, the serviceable obtainable market, is the share of SAM you can realistically win in a given period against real competition. There are two common ways to estimate TAM. The top-down approach starts from an analyst's industry figure and narrows it with assumptions. The bottom-up approach starts from the number of potential customers multiplied by the expected revenue per customer, which tends to be more defensible because each input can be checked. TAM matters for several decisions. Founders use it to judge whether a market is large enough to build a company around and to convince investors. Sales and marketing leaders use it, narrowed through the ICP, to size the real target list and set quotas that are grounded in how many qualified accounts actually exist. A TAM number with no path from it to a concrete list of accounts is just a headline.