What is Serviceable Available Market (SAM)?
Serviceable Available Market, or SAM, is the portion of the total market that a company can realistically serve based on its product, technology, and geographic constraints.
Detailed Explanation
SAM is a subset of the Total Available Market (TAM) and is the market that can actually be reached by a company’s products or services. It takes into account the limitations a business may have in serving the entire market. In the SaaS context, SAM could be a subset of a software market that a company can serve based on its product’s unique features, the technology stack used, and the geographies it can reach.
Why It Matters
For SaaS CEOs and CMOs, understanding SAM is essential to devise realistic business strategies. It helps identify the real market potential that is serviceable with their current capabilities, and can inform business model adjustments, product enhancement, or geographic expansion decisions.
Potential Misunderstandings
It’s important to note that SAM is different from Serviceable Obtainable Market (SOM), which is the portion of SAM that can be captured and served by a company within its operational resources and constraints.
Frequently Asked Questions
- What’s the difference between SAM and TAM?
While TAM refers to the total market demand for a product or service, SAM is the portion of TAM that can realistically be served by a company. - How is SAM calculated in a SaaS company?
SAM in a SaaS company can be calculated by identifying the total potential customers in TAM and then refining this figure based on the company’s product features, technology, and geographic reach.