Glossary / Total Addressable Market
Total Addressable Market (TAM) refers to the total revenue opportunity available for a specific product or service within a specific market. It represents the maximum potential market size that a company can target. TAM is calculated by estimating the total number of potential customers or users for a product or service and multiplying it by the average revenue per customer. This calculation helps businesses understand the size of the market they are operating in and the revenue potential they can achieve. TAM is an important metric for businesses as it helps them assess the market opportunity and make informed decisions about their marketing and sales strategies. It also helps in determining the potential growth and scalability of a business. However, it is important to note that TAM represents the total market opportunity and not the actual market share that a company can capture. Market share depends on various factors such as competition, pricing, product differentiation, and customer preferences.