Serviceable obtainable market
som (rhymes with mom)
The realistic share of SAM you can capture in a defined period. Your actual revenue target, grounded in competitive reality.
SOM is what you can actually win. It accounts for competition, your current sales capacity, brand awareness, and the time it takes to close deals. If your SAM is $2B but you have 10 salespeople and three competitors with established positions, your SOM for the next three years might be $50M.
SOM is the most useful of the three metrics for operational planning. TAM and SAM set the ceiling. SOM sets the budget. It determines how many salespeople to hire, how much to spend on marketing, and what revenue targets are realistic.
Investors use SOM to evaluate whether your growth plan is credible. A company claiming they will capture $500M of a $2B SAM in three years better have an extraordinary distribution advantage. A company targeting $100M of the same SAM with a clear GTM plan and strong product differentiation is more believable.
Examples
A Series A company estimates SOM.
SAM: $1.2B. Current ARR: $3M. Sales team: 8 AEs. Average deal size: $40k. Realistic deals per AE per year: 20. Maximum new ARR with current team: $6.4M. Three-year SOM with planned hiring: $40M.
SOM adjusts after a competitor exits.
A major competitor gets acquired and deprioritizes the product. Their 15% market share becomes available. The company revises its three-year SOM from $30M to $55M and accelerates hiring.
SOM reveals an overly aggressive plan.
The board wants $100M ARR in three years. SOM analysis shows the maximum realistic capture is $60M given market size, competition, and sales capacity. The board adjusts expectations or funds aggressive GTM investment to change the math.
In practice
Read more on the blog
Frequently asked questions
How do you calculate SOM?
Start with SAM. Factor in your current market share, sales capacity, win rate, and competitive position. Multiply the number of deals your team can realistically close by your average deal size. Project forward with planned hiring and marketing investment.
What is a realistic SOM as a percentage of SAM?
Most companies capture 2-5% of their SAM in the first few years. Market leaders eventually capture 15-30% of SAM. Claiming more than 30% market share requires extraordinary evidence of a dominant competitive position.
Related terms
The total revenue opportunity if you captured 100% of the market. The theoretical ceiling, not a realistic target.
The portion of TAM that your product can actually serve given your current capabilities, geography, and distribution.
A description of the company (not person) most likely to buy, succeed, and expand with your product. Your best-fit customer.
A strategic document that outlines how a company will launch a product or enter a market, covering positioning, channels, pricing, and sales.
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