Definition: The Serviceable Available Market (SAM) represents the realistic portion of a market that your business can actually serve with its current capabilities, resources, and business model.
Think of SAM as the practical subset of your Total Addressable Market (TAM). While TAM represents the theoretical maximum market opportunity (all potential customers globally), SAM narrows this down to what's realistically within reach today. It's like a fisherman who knows there are millions of fish in the ocean (TAM), but can only access those within sailing distance using current equipment (SAM).
SAM is typically expressed as a monetary value calculated by multiplying:
A cloud software company might identify a $50 billion TAM (all global businesses needing their type of solution). However, their SAM might be just $12 billion after accounting for geographic markets they serve, languages supported, and integration capabilities with popular platforms. This more focused figure provides investors with a realistic view of near-term business potential.
Understanding your SAM helps set proper expectations and develop strategic growth plans. As your business capabilities expand, your SAM typically grows closer to your TAM, representing increased market opportunity.
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