Focuses owners on their future roadmap and product evolution.The importance of a TAM exercise is primarily to understand the revenue opportunity, but it also offers secondary advantages: The Advantages of a Thorough TAM Understanding For that, a deep understanding about TAM allows entrepreneurs to be aware of the blurred lines between their markets. The realization of Moore’s Law is shortening technological improvement cycles and adding (exciting) uncertainty about the rapid coalescence of markets. In modern times, a TAM has become an important metric and a more creative process of calculating it has emerged due to the increased speed in which new markets are evolving. It is an exercise that will shed light towards the level of effort and funding to be put into a new business line, because it provides guidelines about the largesse of its economic potential. Total addressable market ( TAM, occasionally referred to as total available market) is a form of market sizing that enables a business to define the holistic revenue opportunity offered from its product or service. TAM Is a Popular Metric That Is Often Misunderstood The large gap between the TAM, but small gap between SAM and SOM demonstrate that the business is a niche player, but highly effective and desirable within its niche. Relative to its TAM, WeWork's SAM and SOM are 12.4% and 2.6% respectively.This corroborates with a total estimated 25% market share held by all coworking businesses, of which WeWork is a leading player. Projecting out WeWork's revenue for five years' time gives a estimation of $33.8 billion, which corresponds to 20.9% of its SAM.Narrowing the TAM down to workers within the "Creative Class"-those with tertiary education, urban living and working in enterprises with less than 250 people-gives a SAM of $168 billion.Calculations for the size of the workspace market for desk-based service sector workers within OECD nations and the current WeWork markets suggests a TAM of $1.35 trillion.This data has been professionally compiled, is credible and is quick to find however, using it can compromise your ability to understand your market deeper via proprietary research. Research companies, such as Gartner or IDC, publish reports that often postulate upon sectoral TAMs. It estimates the value-add (tangible and intangible) provided by the new offering and uses that to assume a theoretical revenue opportunity.
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