Total Addressable Market (TAM)
What is total addressable market (TAM)?
Total addressable market (TAM), also known as total available market, is the revenue market opportunity for a service or product if a company reaches 100% of the market share. TAM finds available market size, expected growth and competition.
The three methods to calculate TAM are value theory, top down and bottom up. Value theory depends on the value a product provides a customer and how much a customer would pay for the product. Top down is based on market reports, industry data and research studies. Bottom up relies on past pricing and sales data.
Within TAM, there are serviceable addressable markets (SAMs) and serviceable obtainable markets (SOMs).
Why is total addressable market (TAM) important to healthcare?
Total addressable market helps a company discover opportunities in the market across different points in time. TAM also helps companies effectively prioritize funding and resources needed to launch a new service or product.