What is SAM (Serviceable Addressable Market)?

SAM (serviceable addressable market) is the part of your total addressable market that your current product, pricing, sales coverage and regions can actually serve, measured as the annual revenue those reachable customers represent.

At a glance

• What is SAM (serviceable addressable market)? TAM minus the customers you can’t serve today, because of geography, language, integrations, company size, compliance or price.
• Formula: SAM = number of companies you can serve × average annual contract value.
• It sits between TAM (everyone who could buy) and SOM (what you can realistically win soon).
• It’s sometimes written “serviceable available market”. Same idea.
• SAM changes when the product or the go-to-market changes, so it needs revisiting each planning cycle.

How to calculate SAM

Start from a bottom-up TAM and apply the limits that are true today. Remove regions you don’t sell into, company sizes your product doesn’t fit, industries where a compliance requirement rules you out, and companies running systems you don’t integrate with. What’s left, multiplied by the annual price, is SAM. The account-by-account version of this is in bottom-up market sizing starts with a list of real accounts.

The filters are the same ones used in firmographic filtering, which is why SAM and your ICP should agree. If they don’t, either the ICP is too narrow or the SAM is wishful.

Example (illustrative): a fleet software company has a bottom-up TAM of 30,000 US carriers. Its product only integrates with two of the main ELD providers, which cuts the list to 12,000. It doesn’t support fleets over 300 trucks yet, which leaves 10,500. At $15,000 a year, SAM is about $158 million. Shipping a third ELD integration would move SAM more than any marketing campaign.

Why SAM is the number to plan with

TAM tells investors how big the prize is. SAM tells a sales leader how many accounts the team can work, how to divide them into territories and how many reps that list supports. Market share is also more honest when it’s stated against a defined segment: AtoB, a partner of ours, scaled to 7% market share in the U.S. trucking fuel card segment, a far more useful number than a share of all fleet spending. Read how the AtoB sales team was built.

Common SAM mistakes

• Treating SAM as TAM with a haircut. “We can serve 30% of the market” with no list behind it isn’t a SAM.
• Ignoring product limits. Missing integrations and unsupported company sizes are the most common real limits.
• Not revisiting it. A new region, product line or partnership can change SAM more than a year of selling.
• Counting accounts you can reach but can’t win. A segment where every company is locked into a multi-year contract with a competitor is serviceable on paper only. Note it, and plan for when those contracts come up.
• Mixing definitions across TAM, SAM and SOM. They should nest, using the same price and filters.

Terms that sit next to SAM

The next step down is SOM, and there’s a worked method in how to calculate serviceable obtainable market for a startup. SAM is also where market sizing turns into segmentation: the serviceable accounts get split by size, industry or region, and each segment gets its own message and coverage.