It is the maximum market value your company
Posted: Sat Jan 18, 2025 6:28 am
Taking that risk without considering the potential market size would be foolish. For this reason, companies go through a market sizing process that involves understanding the overall potential market size and what share they can hope to capture of it. How to calculate market size Market sizing involves a lot of metrics: If you’re even slightly familiar with market sizing, you’ve probably heard the terms TAM, SAM, and SOM. We use Similarweb to determine market size . Here, we’ll dive into what each of these means and how to calculate them using bottom-up analysis that takes into account a variety of variables that affect market value.
Total Addressable Market (TAM) looks at the entire potential value of a market (think, for example, of the total value of toothbrush sales in the U.S. in a given year). This is a huge number, and unlikely to be achieved by a single company kenya email list (unless it is a monopoly). TAM can provide a basis for assessing the potential and stability of a market. Calculate TAM by adding up all the product sales in the market. There are two ways to do this: ) add up the toothbrush sales figures for each grocery, drugstore, and retail chain, and ) estimate the number of toothbrushes the average person buys, multiply that by the number of people in America, and then multiply that by the average price of a toothbrush.
Serviceable Addressable Market (SAM) is the specific potential audience for your product or offering (in our toothbrush example, the total value of electric toothbrushes for children sold online only). could potentially have. Calculate SAM by adding up all relevant product sales in the market (in our example, add up the online purchases of electric toothbrushes for kids). Serviceable Obtainable Market (SOM) , also known as Share of Market, is the share of the SAM market that you are likely to be able to capture for your company. Assuming you are not the only manufacturer of children's toothbrushes, this number will be less than the SAM.
Total Addressable Market (TAM) looks at the entire potential value of a market (think, for example, of the total value of toothbrush sales in the U.S. in a given year). This is a huge number, and unlikely to be achieved by a single company kenya email list (unless it is a monopoly). TAM can provide a basis for assessing the potential and stability of a market. Calculate TAM by adding up all the product sales in the market. There are two ways to do this: ) add up the toothbrush sales figures for each grocery, drugstore, and retail chain, and ) estimate the number of toothbrushes the average person buys, multiply that by the number of people in America, and then multiply that by the average price of a toothbrush.
Serviceable Addressable Market (SAM) is the specific potential audience for your product or offering (in our toothbrush example, the total value of electric toothbrushes for children sold online only). could potentially have. Calculate SAM by adding up all relevant product sales in the market (in our example, add up the online purchases of electric toothbrushes for kids). Serviceable Obtainable Market (SOM) , also known as Share of Market, is the share of the SAM market that you are likely to be able to capture for your company. Assuming you are not the only manufacturer of children's toothbrushes, this number will be less than the SAM.