Total addressable market (TAM): TAM vs SAM vs SOM, with a worked B2B example

The three terms nest inside each other. Each one answers a narrower question, and each one should come with an account count, not only a dollar figure.

You will also see serviceable available market for SAM and serviceable obtainable market or share of market for SOM. Total available market is another name for TAM. "Addressable market" on its own is loose, so when someone quotes one, ask whether they mean TAM or SAM. The GTM glossary has short definitions of these and the terms around them.

If pricing varies a lot by company size, split the count into size bands and multiply each band by its own ACV, then add them up. One blended ACV across a 20-person shop and a 2,000-person company will mislead you in both directions.

Say you sell scheduling and dispatch software to US home services contractors (HVAC, plumbing, electrical) with 10 to 200 employees, at about $6,000 a year per company. The numbers below are made up to show the method. Swap in your own.

Top-down

You find an analyst report that sizes the global field service software market at $5B. You assume you can take 1% and call your market $50M. The math is quick and it looks fine in a deck, but nothing in it can be checked. The report's definition of the category may include enterprise utilities you will never sell to, and the 1% is a guess with nothing under it.

Bottom-up

1. TAM: you count about 60,000 US contractors in those trades with 10 to 200 employees. 60,000 × $6,000 = $360M a year.
2. SAM: today you support 12 states and only integrate with QuickBooks. About 18,000 of those contractors pass both limits. 18,000 × $6,000 = $108M.
3. SOM: you have four account executives who can each close about 40 deals a year. Over three years that is 480 accounts, or about 2.7% of SAM. 480 × $6,000 = $2.9M in annual recurring revenue.

The bottom-up version gives a smaller headline, and it is the one an investor can test. Ask how you got to 60,000 and you can show the filters and the source. It also tells you something useful: SAM is less than a third of TAM, so adding states and a second accounting integration grows the serviceable market faster than hiring more reps would.

Analyst reports size categories for large vendors and investors. Their definitions are broad and the method usually sits behind a paywall. A dollar figure also gives a sales team nothing to act on. A startup needs to know which companies to sell to this quarter.

A bottom-up count fixes that. The ICP becomes a set of filters a database can check, and every assumption is written down where someone can argue with it. When the ICP changes, you rerun the filters and the number moves with it. Most of all, the list you used to size the market is the same list sales works from, so the TAM doubles as the target list.

There is one trap. Company databases miss plenty of businesses, especially small, local and non-tech ones that barely exist on LinkedIn. If your buyers look like that, count from public sources too: state licensing boards, provider registries, permit filings, Google Maps listings. The data enrichment tools guide covers where each kind of record comes from. And if the official count comes from government data, the US Census Bureau's Statistics of US Businesses publishes firm counts by industry and employee size, which is a good sanity check on your database's number.

Then price it. Enriching every account and finding verified contacts costs real money at TAM scale, and it is easy to underestimate. The TAM calculator works out that line from current vendor rates.

At OneGTM the TAM is the first thing I build in an engagement, in the first two weeks while sending domains warm up. It is every account that fits, pulled from several sources, deduped, qualified and scored, and the client reviews that snapshot before any list goes into a campaign. The rest of the GTM playbook works off that list.

For one vertical SaaS client with a TAM of about 45,000 companies, rebuilding the scoring model moved the median score from 0.25 to 0.50 and left 2,001 accounts above 0.75. That top tier is what the team worked first. The market isn't always a list of companies, either. For Green Dock Partners, a private equity firm buying industrial real estate, the market was sites, so the tracker counts 518 industrial sites from public closure news and ranks the top ones for calls.