Serviceable Obtainable Market (SOM)

Date created: Oct 20, 2021  •   Last updated: Oct 21, 2021

What is Serviceable Obtainable Market?

Serviceable Obtainable Market (SOM) measures the realistic revenue potential of a product or service in a particular market.

Alternate names: Share of Market

Serviceable Obtainable Market Formula

ƒ (Sum(Last year’s revenue) / Sum(Last year’s SAM)) * Sum(This year’s SAM)
ƒ Sum(Market share) * Sum(This year’s SAM)

How to calculate Serviceable Obtainable Market

Say you own a risk management consultancy with a previous year revenue of $10 million. The previous year’s SAM was $500 million, giving you a market share of 2%. Your research tells you that this year’s SAM is $550,000,000. In this scenario, your SOM would be 2% of $550 million, which is $11 million.

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How to visualize Serviceable Obtainable Market?

SOM is generally represented as a single number, however, it can be useful to use bar charts to compare your SOM to a previous year, or to a different industry to offer perspective on the benefits of investing in your business. Check out the example:

Serviceable Obtainable Market visualization examples

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Serviceable Obtainable Market

Bar Chart

Here's an example of how to visualize your Serviceable Obtainable Market data in a bar chart and compare your performance to previous periods.
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Serviceable Obtainable Market

$729M

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23.52

vs previous period

Comparison Chart

Here's an example of how to visualize your current Serviceable Obtainable Market data in comparison to a previous time period or date range.
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Serviceable Obtainable Market

Bar Chart

Here's an example of how to visualize your Serviceable Obtainable Market data in a bar chart and compare your performance to previous periods.

More about Serviceable Obtainable Market

Serviceable Obtainable Market generally captures all factors that limit the scale of demand for your business, such as competitors' market share, speed of delivery, proximity to customers, ease of purchase, language or other demographic barriers, and other forms of friction between your business model and your target customer.

SOM is the lowest in the hierarchy of market share metrics, including Total Addressable Market (TAM) and Serviceable Addressable Market (SAM) but is no less important. While TAM captures the maximum possible market share for a product or service and SAM captures the maximum sales potential of your target audience, SOM provides the most realistic picture of your potential revenue. This is therefore a useful metric to forecast sales, plan your business strategy, study your target demographic, and present to investors as the future return potential of your business.

SOM measures your revenue given that you successfully capture every possible customer who fits your niche. In reality, this is impossible to achieve. However, SOM acts as both an aspirational metric and as a benchmark for your current performance and future growth projections. For investors, this metric describes the potential short term return on their investment.

Serviceable Obtainable Market Frequently Asked Questions

What is a good Serviceable Obtainable Market?

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Serviceable Obtainable Market varies by many limiting factors specific to your business model, and is therefore difficult to benchmark. It is worth noting that SOM usually makes up a small portion of your SAM and TAM.

Why is the Serviceable Obtainable Market metric important to investors?

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Serviceable Obtainable Market offers a realistic view of revenue that can be expected in the near future, as it is based on recent performance and an up-to-date SAM. Investors are attracted to companies with the potential to reach a high SOM, given investment and nurturing. You can track SOM and other top metrics that matter to investors on a free analytics tool such as PowerMetrics to easily present your market share analyses and display encouraging trends in your business over time.