The short answer
TAM (total addressable market) is the total demand for your kind of product. SAM (serviceable addressable market) is the part your product and go-to-market can actually reach. SOM (serviceable obtainable market) is the share you can realistically win in the next few years.
- TAM is the whole market; SAM is what you can serve; SOM is what you can win soon.
- Bottom-up sizing (customers × price) is more credible than top-down.
- Cite your sources for every input.
- Investors care most that the SOM leads somewhere big.
The three layers
- TAM: everyone who could buy this kind of product, times what they'd pay.
- SAM: the slice you can serve with your product, geography and channels today.
- SOM: the portion of SAM you can realistically capture in a defined period, given competition and sales capacity.
Worked example (hypothetical, bottom-up)
| Layer | Assumption | Size |
|---|---|---|
| TAM | 20,000 independent dental practices × $6,000/year | $120M |
| SAM | 6,000 practices in states where you can sell and support today | $36M |
| SOM | 5% of SAM in three years, given a two-person sales team scaling to eight | $1.8M ARR |
Every number here is illustrative. In a real deck, each input (practice counts, price) should cite a source such as a government dataset or industry association, or your own pricing.
Why it matters to a pre-seed or seed founder
Investors discount huge top-down numbers ("1% of a $50B market"). A bottom-up model with cited inputs shows you understand your customer and how you'll reach them. Make sure the SOM connects to your revenue plan and your ARR targets. See our pitch deck checklist.
Frequently asked questions
Top-down or bottom-up?
Bottom-up (number of customers × price) is usually more credible. Use top-down figures only as a cross-check.
How big does TAM need to be?
Big enough that winning a meaningful share could produce the outcome your investors need. Show the path, not just the size.
Should SOM match my financial model?
Yes. Your SOM and your revenue forecast should tell the same story.