Serviceable Addressable Market or SAM refers to the portion of the total addressable market (TAM) that a company or product can realistically and effectively serve or target. In other words, SAM represents the specific segment of the overall market that aligns with the company’s capabilities, resources, and focus.
To calculate it, you must multiply the number of customers in the target segment by the average contract value. For instance, if a business has one million customers in the target segment and an average contract value of $9.99, the Serviceable Addressable Market equals $9,900,000.
ƒ Count(Customers in Target Segment) * Sum(Average Contract Value)
There is no universally set benchmark for the Serviceable Addressable Market (SAM) since it depends on factors like industry, geographic location, and other variables. Nevertheless, SAM represents a percentage of the Total Addressable Market but is always less than it.
Total Addressable Market
Annual Contract Value
Serviceable Obtainable Market
A good Serviceable Addressable Market (SAM) aligns with a company's capabilities and resources, representing a realistic and reachable subset of the total addressable market.
The Serviceable Addressable Market metric is crucial to investors because it provides insights into a company's strategic focus and realistic growth potential. By understanding the subset of the market a company can effectively serve, investors can assess the alignment between the business's goals, resources, and market opportunities.