The TAM SAM SOM Method: How to Calculate Your Addressable Market

What are TAM (Total Addressable Market), SAM and SOM?#

TAM, SAM and SOM are three measures of a market's size, from the widest to the narrowest. The TAM (Total Addressable Market) is the total market. The SAM (Serviceable Addressable Market) is the market your offer can serve, and the SOM (Serviceable Obtainable Market) is the share you can realistically win.

These markets are nested, so you should not add the three figures together. The TAM measures the total demand for a product or service.

The SAM removes what your offer does not cover: an area out of reach, a trade you do not serve. SOM is the portion you can win with your available resources, taking the competition into account.

So the SAM never exceeds the TAM. The terms behind the acronyms vary by source: TAM can also stand for "total available market," and SAM for "Serviceable Available Market." The meaning stays the same: total market, target market, attainable share.

Why do TAM, SAM and SOM matter for a business?#

TAM, SAM and SOM help you set sales goals that hold up. A sales goal is judged against the SOM, not the TAM. Aiming for a share of a market your team cannot reach tells you nothing about your sales.

The three numbers also give a business plan its structure. In a fundraising round, the TAM shows investors the market's potential. The SOM shows what the company plans to capture in the short term.

Finally, the SOM forces you to look at the competition. A customer already working with a competitor can switch suppliers, but you have to win them over: factor that difficulty into your sales goal. That is the link between TAM, SAM and SOM and your sales strategy.

The TAM SAM SOM method in practice: auto repair shops in France#

Take a fictional company: an online tire seller that recruits partner auto repair shops to mount its customers' tires. Here is how it applies the TAM SAM SOM method to its market.

TAM. On its page on shops that mount tires, published in October 2026, the Scalon Observatory estimates that about 42,200 auto repair shops mount tires in mainland France. These are all the shops that could become partners.

SAM. Calculating the SAM removes the shops the offer does not target. Our seller excludes shops that already mount tires as partners of Allopneus or 1001Pneus (two French online tire sellers), which account for about 1 in 6 shops. That leaves about 35,000 shops, outside these two networks. This choice is specific to this example: set aside customers who already have a supplier only if your offer is not meant for them.

SOM. Calculating the SOM starts from your resources, not from an abstract market share. Make two illustrative assumptions: your team contacts 1,000 shops over twelve months, and one in ten signs. The SOM is then 100 shops.

The 1,000 shops contacted and the close rate of one in ten are illustrative assumptions, not industry averages. Replace them with your own. To estimate your close rate, review your past outreach to comparable prospects: how many signed? With no track record yet, present that rate as an assumption to test.

To run your own calculation, fill in these three lines:

• TAM: how many locations could use your offer? ___
• SAM: how many are left in your area, among those your offer can serve? ___
• SOM: how many prospects your team can contact over twelve months ___ × your close rate ___ = ___ new customers.

To get to revenue for a full year, multiply the SOM by what one customer pays you in a year. In the first year, factor in when each customer signs: not all of them will pay for twelve months. Then base your marketing budget on that realistic figure rather than on the TAM.

To estimate the addressable market of a region, the local addressable market calculator starts from the same count, location by location.

How do you calculate TAM, SAM and SOM: top-down or bottom-up?#

There are two approaches to estimating market size with the TAM SAM SOM method.

The top-down approach starts from a market study or industry reports. You narrow the overall figure step by step down to the target segment. At each step, you estimate what proportion of the market matches the customers you target.

The bottom-up approach starts by counting potential customers. That count already gives you the market as a number of locations. To express it in euros per year, multiply that number by what each customer spends in a year on your product or service.

These two definitions come from Salesforce's TAM, SAM and SOM guide, which explains that the top-down approach relies mainly on external sources such as industry reports. The Amazon Ads guide calculates the TAM "by multiplying the total number of potential customers by the average revenue per customer."

When your customers are stores or workshops, they can be counted: start by finding how many locations match your offer, rather than starting from an assumption. The figure of 42,200 shops in our example is an estimate; the method is explained below.

TAM SAM SOM analysis: two mistakes that distort your market estimate#

The first mistake is confusing a company with its places of business. A company can have several stores or workshops: each one is a location. A company with three sites therefore has three locations. Insee (France's national statistics office) defines the establishment as "a geographically distinct production unit that is legally dependent on a legal entity."

If you sell to each site, count locations. If a company's headquarters buys for all its locations, count companies.

The second mistake is citing a market figure with no source or date. If you overestimate your TAM, your goals, your budget and the business plan shown to investors rest on a market that does not exist.

Where to find market figures: the Sirene directory and why its date matters#

To do your own count, use Insee's Sirene directory (the French government's register of businesses). It lists companies and their locations. The Sirene database on data.gouv.fr publishes full snapshot files (a complete copy of the directory) every month under the Licence Ouverte (France's open data license).

These files also contain closed locations. Keep only active locations before counting, or you will overestimate your TAM. Record the file's version date next to each figure.

Is your SAM based on an APE code (the French main-activity code assigned by Insee, also called the NAF code)? Record the date of the classification used for that filter, too. All active legal units in the directory and their locations receive a new APE code starting January 1, 2027, according to Insee.

Method#

The two counts in the example come from the Scalon Observatory. The estimate of 42,200 auto repair shops that mount tires in mainland France is based on shops studied in August 2026 and the Allopneus and 1001Pneus partner lists collected on September 24 and 25, 2026 (page published on October 14, 2026, updated on November 9). The estimate of 38,600 independent auto repair shops in France, with no chain, franchise or network affiliation, was checked using 1,350 randomly selected shops (page published on October 14, 2026, updated on November 9, 2026). The details of the calculations are on each page.

Sources#

• TAM, SAM, and SOM: Made Simple for Growing Businesses, Salesforce
• TAM SAM SOM : Qu'est-ce que c'est et comment le calculer ?, Amazon Ads
• Définition de l'établissement, Insee
• Base Sirene des entreprises et de leurs établissements, data.gouv.fr
• Vers une nouvelle nomenclature : la NAF 2025, Insee
• 42,200 shops in France fit tires, Scalon Observatory
• 38,600 independent auto repair shops in France have no chain, franchise or network affiliation, Scalon Observatory