B2B SaaS TAM SAM SOM Template

• TAM, or total addressable market, describes the total market of companies that need software and services like yours.
• SAM, or serviceable available market, is a segment of your TAM. It is found by funneling the TAM based on your business (its geography and industry regulations, for example).
• SOM, or serviceable obtainable market, is the realistic market you can win based on your resources, competitive intensity, and buyer appetite.

This guide explains step by step how a SaaS start-up can calculate its total addressable, serviceable obtainable, and serviceable obtainable markets.

At the top line, the TAM SAM SOM calculation process is:

TAM
The number of customers in a market x the annual value per customer

SAM
Target segment of the TAM x the annual value per customer

SOM
Last year's market share x this year's SAM

Free sources

• For a wider sense of the market (TAM), you can get a free account with Hunter and build your market from here
• G2 gives you a sense of your competitors, and from here, you can look through their case studies to see the type of customers they serve
• Yelp helps you visualize the size of your market at the continent, country, state, and city levels.

Paid sources

• The obvious place is your CRM and your customers for rich intelligence on SOM and work backward
• Access to tools like SalesNavigator will give you a sense of scale for TAM
• Analysts like Gartner conduct their research into your category and will give you a sense of the market’s appetite

It's important for a SaaS company to size its market for several reasons:

• Understanding what presence and penetration you have in a market
• Understanding what the scope for growth is in your market
• Guiding your business plan

Here are some ways you can put your TAM SAM SOM analysis to use:

For your revenue goals

• Leverage the SOM element of the market analysis to identify your ideal customer profile (ICP)
• Build campaigns to other ICPs to test the expansion of your SOM
• Set revenue goals for your revenue team (marketing, sales, and success) that are realistic to your current organizational resources

For your hiring goals

• Leverage the SAM element of the market analysis and the results of the ICP testing to research market appetite for your business to capitalize on
• Based on a data-based hypothesis, create a hiring plan that will provide your business with the knowledge and skills to support market entry and expand your SOM.

For your funding goals

• Leverage the TAM element of the market analysis alongside your revenue and hiring plans to demonstrate the art of the possible
• Conduct market research to support a funding run so that investors can appreciate your understanding of the market and what dials you need to turn in your product, hiring, and revenue teams to expand your market share.