Total addressable market

Total addressable market (TAM), also called total available market, is a term that is typically used to reference the revenue opportunity for a product or service. TAM helps prioritize business opportunities by serving as a size metric of a given opportunity's underlying potential.

TAM can be defined as a global total (even if a particular company could not reach some of it) or, more commonly, a sub-market that one specific product or service could serve (within realistic expansion scenarios). The inclusion of constraints such as distribution and competition challenges then modifies the concept, reducing the market down to the serviceable available market (SAM), the percentage of the market that can be served (either by that company or all providers) out of the TAM. This is occasionally referred to as PAU (Potential Active Use). Competitive dynamics reduce the SAM to SOM.

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