Total addressable market (TAM) is a measurement of the total revenue a business could earn for a single product if it owned the entire market share for that product.
Total addressable market (TAM) is a market evaluation that businesses use to identify the total revenue opportunity for a product or service. By identifying this opportunity, businesses can make more informed decisions about how many sales, product, and marketing resources to put behind the product or service.
There are several ways to calculate total addressable market (TAM), but the most standard is multiplying the average revenue for a particular product by the number of customers within the entire market segment. Collecting this data can be difficult, however, as it involves competitor and other market research.
To better understand their market, businesses often look at TAM in relation to two other metrics: