TAM, SAM, SOM: How They Shape Enterprise SEO Strategy

Struggling to find the right market for your SEO strategy? TAM, SAM, and SOM break it down—helping you target the right audience and maximize growth!

Let me explain the concept of market sizing using a simple analogy – think of it like planning to open an ice cream shop in your city.

TAM, SAM, and SOM are three ways of looking at your potential market, each getting more specific and realistic. Let me break this down with a clear comparison:

Think of it like this: 

• TAM is like saying “How many people eat ice cream in our city?” (The dream scenario)
• SAM narrows it to “How many of those people would be interested in and able to buy our particular kind of ice cream?” (The potential customers)
• SOM gets real with “How many customers can we actually expect to win over?” (The practical goal)

This way of thinking helps business owners:

1. Dream big while staying grounded (TAM)
2. Focus on the right customer groups (SAM)
3. Set achievable goals (SOM)

Just like you wouldn’t expect every ice cream eater in the city to visit your shop, understanding these different market levels helps businesses set realistic expectations and make better plans for growth.

Market Sizing 101: TAM, SAM, SOM Framework for Startups

Let me dive deeper into these market concepts using our ice cream shop example to really understand how they work together and help with business planning.

Total Addressable Market (TAM) – The Big Dream

Imagine looking down at your entire city from an airplane. TAM is like counting every single person who might ever eat ice cream. This includes:

• People who eat ice cream regularly
• People who only eat ice cream occasionally
• People who might start eating ice cream in the future
• Every age group, income level, and neighborhood

In business terms, TAM helps you understand the maximum theoretical opportunity. For our ice cream shop, if there are 500,000 people in the city and the average person spends $50 per year on ice cream, your TAM would be $25 million. While you’ll never capture this entire market, it helps you understand if the overall opportunity is big enough to pursue.

Serviceable Addressable Market (SAM) – The Realistic Target

Now, let’s zoom in closer to your specific ice cream shop concept. You’re planning to offer premium, artisanal ice cream with unique flavors. Your SAM would consider:

• People within reasonable driving distance (say 3 miles)
• Those who can afford premium prices ($6-8 per scoop)
• Customers who appreciate artisanal food
• People who aren’t restricted by dietary limitations

If your 3-mile radius has 100,000 people, and 20% fit these criteria and might spend $100 per year on premium ice cream, your SAM would be $2 million. This number is much more relevant for your planning because it represents your actual potential customer base.

Serviceable Obtainable Market (SOM) – The Practical Reality

Finally, let’s get very specific about what you can actually achieve in your first year or two. Your SOM considers:

• Competition (there are already three other ice cream shops nearby)
• Your capacity (you can only serve 200 customers per day)
• Marketing reach (your advertising budget can only reach so many people)
• Practical limitations (parking spaces, hours of operation)

If you estimate you can capture 15% of your SAM, your SOM would be $300,000. This becomes your actual business target for early planning.

Why This Matters for Business Planning:

1. Investment Decisions: If your TAM is too small, the business might not be worth pursuing at all.
2. Location Selection: Your SAM analysis might show that certain neighborhoods have more potential customers than others.
3. Product Development: Understanding your SAM helps you design products that appeal to your actual potential customers.
4. Resource Allocation: Your SOM helps you decide how much to spend on equipment, staff, and marketing.
5. Growth Planning: As you succeed, you can work on expanding your SOM by addressing limitations, then growing your SAM through new products or locations, and eventually even increasing your TAM through market development.

Think of it like concentric circles: SOM is the inner circle of customers you can realistically reach now, SAM is the middle circle of all potential customers for your specific offering, and TAM is the outer circle representing the entire possible market. Each circle helps with different aspects of business planning and strategy.

TAM, SAM, SOM: How to Calculate & Apply Them to Any Business

Let me show you how to calculate TAM, SAM, and SOM using both our ice cream shop example and then another business type to help solidify the concept.

Ice Cream Shop Calculation Method:

First, let’s calculate TAM (Total Addressable Market):

1. Identify total population in your city: 500,000 people
2. Average annual ice cream spending per person: $50
3. TAM Calculation: 500,000 × $50 = $25 million potential market

For SAM (Serviceable Addressable Market):

1. Identify population within 3-mile radius: 100,000 people
2. Apply qualifying factors:
   – Income level (can afford premium): 40% = 40,000 people
   – Interest in artisanal food: 50% of those = 20,000 people
3. Higher spending per customer (premium prices): $100/year
4. SAM Calculation: 20,000 × $100 = $2 million serviceable market

For SOM (Serviceable Obtainable Market):

1. Consider limitations:
   – Store capacity: 200 customers/day × 360 days = 72,000 visits/year
   – Average visit value: $8
   – Repeat customer frequency: 3 visits/year
2.  Calculate realistic customer base: 72,000 ÷ 3 = 24,000 unique customers
3. Apply market share factor (competition): 15% of potential customers
4. SOM Calculation: 24,000 × 15% × $8 × 3 = $86,400 obtainable market

Now, let’s apply this to a different business – a mobile app for pet care services:

TAM Calculation:

1. Total number of pet owners in target country: 85 million
2. Average annual pet care spending: $200
3. TAM = 85 million × $200 = $17 billion

SAM Calculation:

1. Pet owners in urban areas (app’s focus): 60% = 51 million
2. Smartphone users who use apps: 80% = 40.8 million
3. Those willing to use app-based services: 40% = 16.3 million
4. SAM = 16.3 million × $200 = $3.26 billion

SOM Calculation:

1. Consider practical factors:
   – First-year marketing reach: 5% of SAM
   – Expected conversion rate: 2%
   – Average user spending through app: $150
2. SOM = 16.3 million × 5% × 2% × $150 = $244,500

Key Insights from These Calculations:

• Market Size vs. Accessibility
  The gap between TAM and SAM shows how market constraints (location, preferences, technology adoption) affect your real opportunity. In the ice cream example, only 8% of TAM becomes SAM, while in the pet app, it’s about 19%.
• Reality Check
  SOM calculations force you to consider practical limitations. Notice how the ice cream shop’s SOM is limited by physical constraints (store capacity), while the app’s SOM is limited by marketing reach and conversion rates.
• Growth Planning
  These calculations help identify growth levers:
  • Ice cream shop could increase SOM by extending hours or adding delivery
  • Pet app could grow by increasing marketing reach or expanding to new cities
• Investment Decisions
  The calculations help determine required investment. For example:
  • Ice cream shop needs inventory and staff to serve $86,400 in annual sales
  • Pet app needs marketing budget to reach 5% of SAM

Understanding SEO TAM: Why Search Intent Matters More Than Just Keywords

Imagine you own a coffee shop in New York. You check Google and see that the keyword “best coffee” gets searched 50,000 times per month. That’s huge, right? You might assume that if you rank #1, you’ll get thousands of customers.

But here’s the catch—not all searches mean the same thing.

• Some people might be looking for coffee brands to buy online.
• Others may want to learn how to brew the best coffee at home.
• Some might be searching for the best coffee shop near them—but they’re in a different city.

This is where the “TAM Trap” happens. Just because a keyword has high search volume doesn’t mean all those searches are relevant to your business.

Now, let’s apply this to SEO TAM—instead of looking at the total searches (TAM), focus on the people who actually intend to visit your coffee shop.

For example:

• “Best coffee shop in NYC” – Much better! These people are actively looking for a place like yours.
• “Coffee near me” – If you’re optimizing for local SEO, this is gold.

Even high-volume keywords can have multiple meanings depending on context, like how “Jaguar” could mean a car, an animal, or a sports team. And sometimes, seasonal events or locations can shift search intent, like how a church name might suddenly trend during a festival.

So, instead of chasing big numbers, focus on intent—who is actually looking for your product or service? That’s your real SEO TAM and where your opportunities lie.

Bottom Line: Market Sizing Done Right

Imagine you’re about to open a cozy little coffee shop in town. You’re excited, you’ve got the best beans, and you think, “Everyone loves coffee—this is going to be huge!” But then reality hits. Not everyone is your customer. Some prefer instant coffee at home, some are loyal to big chains, and others don’t even drink coffee at all!

That’s exactly why TAM, SAM, and SOM exist—to turn big dreams into practical plans.

• TAM (Total Addressable Market) is the dream. It’s everyone who could possibly be interested in what you offer.
• SAM (Serviceable Addressable Market) is the real potential—the people who can actually buy from you.
• SOM (Serviceable Obtainable Market) is where things get real—how many of them you can actually attract and serve.

This framework isn’t just for brick-and-mortar businesses—it’s just as important for SEO. If you’re chasing high-volume keywords without thinking about intent, you’re setting yourself up for disappointment. Ranking for “best coffee” sounds great until you realize most of those searches aren’t even looking for a café in your area.

That’s where Exabytes SEO solutions come into play. Instead of blindly competing for broad keywords, you get data-driven insights, keyword strategies, and expert optimization to help you focus on the right audience—the people who are actually looking for what you offer. From on-page SEO, technical audits, to backlink strategies, Exabytes helps you cut through the noise and reach your true market potential.

So here’s the takeaway:
✅ Dream big (TAM), but don’t get lost in the hype.
✅ Be realistic (SAM)—who actually needs your product or service?
✅ Set achievable goals (SOM)—focus on what’s within reach and grow from there.

Whether you’re launching a startup, running a business, or optimizing SEO, understanding real potential vs. wishful thinking will help you make better decisions, set smarter goals, and actually grow—and with Exabytes SEO, you have the right tools to do just that.