9 TAM-SAM-SOM – Guiding the Development of a Realistic Revenue Model
TAM/SAM/SOM defined: Permalink above is unknown
An external facing analysis, the TAM/SAM/SOM, helps marketers develop a “reasonable” and “realistic” revenue model for the product or service that is being marketed. It is broken into three areas:
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- TAM, or Total Available Market, is the total market demand for a product or service. This is generally the total dollar size of the market you think might be available. It can be defined based on geography, total of all prospect and customer potential need, or total share of mind.
- SAM, or Serviceable Available Market, is the segment of the TAM targeted by your products and services that is within your geographical reach. Generally, this is based on your budget, the ability to create “X” number of widgets based on budget, supply chain, or people you hire and train to interact with prospects and customers.
- SOM, or Serviceable Obtainable Market, is the portion of SAM that you can capture. Your product or service will be competing with other company offerings within a defined area, geographic or otherwise. What is the percent of the market that you are competing in that you can reasonably expect to capture?
For more detailed understanding, please review the following:
These reference videos will improve your understanding of this framework.
