SAM (serviceable addressable market) is the portion of your total market you can serve today; SOM (serviceable obtainable market) is the smaller share of that you can realistically win in the next one to three years.
SAM = TAM × proportion you can serve today (geography, segment, product and payment coverage); SOM = SAM × market share you can realistically capture in 1–3 years
Your bottom-up TAM is £500M. Your product currently serves only English-speaking companies that pay by card — about 30% of the market — and your go-to-market plan supports winning 2% of that within three years at a £6,000 average contract value.
SAM = £500M × 0.30 = £150M; SOM = £150M × 0.02 = £3M ARR; customers required = £3,000,000 ÷ £6,000 = 500
SAM and SOM are the two inner rings of the TAM–SAM–SOM market-sizing model. SAM (serviceable addressable market) narrows the total addressable market to the customers you can serve today: your geographies, languages, segments, integrations, and payment methods. SOM (serviceable obtainable market) narrows again to the slice of SAM you can realistically win in the next one to three years, given competition and your sales capacity.
There are two routes to a SOM, and the credible one is bottom-up. Top-down applies a market-share percentage to your SAM (2% of a £150M SAM is £3M); bottom-up builds the number from the customers your team and channels can actually close, multiplied by average contract value. The strongest case cross-checks both — a market-share figure that reconciles with real sales capacity is far harder to challenge.
The classic mistake is the reverse-engineered SOM: picking a flattering percentage ("we only need 1% of the market") with no mechanism to get there. Investors read SOM as a test of go-to-market thinking, not ambition. GoingVC's 2025 investor guidance flags claiming around 10% of SAM in year one without a clear plan as a red flag. If your SOM implies closing 500 customers but your pipeline and CAC support 50, the number undermines the whole plan.
SAM is not fixed: every new geography, language, plan tier, or supported payment method expands the market you can serve, so a roadmap that visibly grows SAM is part of the growth story. SOM doubles as an operating number too. Comparing current ARR to SOM shows your penetration of the winnable market, and dividing SOM by average contract value tells you exactly how many customers you must land over the period.
SAM and SOM turn a vanity TAM into an operating plan. SOM is the figure investors probe hardest in a raise because it exposes whether your growth assumptions reconcile with your sales capacity, pipeline, and CAC — and for you it is the realistic revenue ceiling that hiring plans and forecasts should be built against. A credible SOM, derived bottom-up, buys more trust than any headline TAM.
There is no universal SOM target — credible figures are built bottom-up from sales capacity, not picked. As reference points from investor-facing guidance: a SAM typically lands around 1–10% of TAM (Waveup, 2026), and claiming roughly 10% of your SAM in year one without a clear plan is treated as a red flag by investors (GoingVC, 2025).
SAM is the portion of the total market you can serve as you are today — your geography, segments, product, and payment coverage. SOM is the smaller share of SAM you can realistically win in the next one to three years given competition and your sales capacity. SAM is who you could sell to; SOM is how much you will actually win.
Top-down: apply a defensible market-share percentage to your SAM. Bottom-up — the more credible route — multiply the customers your team can realistically close over the period by your average contract value. The strongest case cross-checks both, so the market-share figure reconciles with real sales capacity.
There is no correct percentage — SAM should be derived from real constraints like geography, language, segment, and payment methods, not assumed. In practice a SAM typically lands around 1–10% of TAM, but investors care far more about how you derived the number than where it falls.
Not quite. SOM is the realistic ceiling on revenue from the market you can serve over the planning horizon; your forecast is the path you actually commit to within it. A forecast that exceeds your SOM, or a SOM that does not reconcile with your CAC and sales capacity, signals the numbers were built backwards.
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