TAM, SAM, SOM
Total addressable market, serviceable addressable market, and serviceable obtainable market: three progressively narrower views of market size.
Why it matters
How you size the market signals how rigorously you think. Top-down sizing borrowed from an analyst report reads as a lack of work; bottom-up sizing reads as competence.
A worked example
Bottom-up: 45,000 target teams multiplied by an $18,000 average contract value gives roughly $810M of TAM, validated against actual pricing from paid pilots.
What is typical
Always build bottom-up. "1% of a $50B market" is the single most common way to lose credibility in a first meeting.
Related terms
ARR
Annual recurring revenue: the annualised value of contracted, recurring subscription revenue.
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