Financial Glossary
Serviceable Obtainable Market (SOM)
Serviceable Obtainable Market (SOM) is the realistic slice of the Serviceable Available Market (SAM) that a company can capture within a defined time horizon given its current resources, sales capacity, competitive position, and go-to-market execution. SOM is sometimes estimated as the company's projected revenue over the next one to three years, derived by applying a credible market share assumption to the SAM. It is the most grounded of the three market-sizing tiers (TAM, SAM, SOM) and is the figure that should anchor near-term revenue forecasts in investor presentations and operating plans.
Problem & Application
A startup selling revenue-management software to RV parks estimates its SAM at $120 million annually (US parks with more than 30 sites that use software). The founding team has capacity to close 20 new accounts per month with a current average contract value of $6,000 per year. Over 12 months that yields $1.44 million in new ARR, and with a 90% renewal rate, total ARR at year-end is approximately $1.4 million -- representing about 1.2% of SAM. That is the SOM for year one. Investors find this credible and internally consistent; a projection claiming 10% SAM penetration in year one would trigger immediate skepticism without a corresponding explanation of sales infrastructure to support it.
In Short
Defining SOM helps businesses set achievable sales targets and secure investor confidence with realistic growth expectations.