TAM (Total Addressable Market)

The total annual revenue available if you had 100% of a market with no competition.

Example

Every logistics firm worldwide that could use scheduling software.

Important

TAM is the least useful of the three and the most abused. A $50B TAM slide with no route to the first customer persuades nobody serious.

Related terms

SAM (Serviceable Addressable Market) — The portion of TAM you could actually serve given your product, geography and business model.
SOM (Serviceable Obtainable Market) — What you can realistically win in the next few years with your actual resources.
Market sizing — Estimating market size, ideally bottom-up from real units and prices rather than top-down from an industry report.

Lessons that explain it

Market size — TAM, SAM and SOM — How to size a market bottom-up so the number means something, instead of the '1% of a $50B market' slide everyone has seen. (12 min)

All 176 terms in the Founder glossary

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