TAM SAM SOM for apps: Everything subscription apps need to know

Understanding the scope of your market is crucial for the long-term success of an app, and this requires familiarity with three essential metrics: Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM). TAM represents the broadest potential market size, useful for long-term planning and attracting investors. However, relying solely on TAM can lead to strategic missteps, as illustrated by Surfline's Paul Ganev, who warns against basing market strategies on TAM without considering SAM, which narrows the focus to those the app can realistically serve, considering current business models and features. SOM further refines this to the segment of SAM that can be realistically converted to paying customers, influenced by factors like competition, price sensitivity, and consumer commitment. The blog emphasizes simplicity in modeling these metrics, advising against overly complex models that might skew results. As an app and its market evolve, so too should these metrics, with a particular emphasis on the power of targeting niche markets for sustainable growth.