General Marketing
Total Addressable Market (TAM)
Total addressable market is the total revenue opportunity available for a product or service if it captured 100% of the market. It helps companies evaluate market size, set realistic growth targets, and communicate potential to investors.
Examples
A project management SaaS estimates its TAM at $15 billion by multiplying the number of potential companies by the average annual contract value they would pay.
Best Practices
Calculate TAM using both top-down and bottom-up methods, segment by serviceable addressable market (SAM) and serviceable obtainable market (SOM), and update annually as markets evolve.