Definitions // SOM
What is SOM?
SOM — Serviceable Obtainable Market — is what you can actually win from your SAM in a defined period. It is the number that makes or breaks credibility.
The investor stress test
When a partner asks "how do you get to $10M ARR?" they are asking for SOM math: accounts, conversion, price, churn, sales headcount, and time. A SOM that is just "2% of SAM" with no engine behind it dies in the room.
SOM is the bottom of the TAM / SAM / SOM funnel, after TAM and SAM.
A workable SOM formula
SOM ≈ (reachable accounts) × (win rate) × (ACV) × (years of ramp, adjusted for churn)
Reachable accounts come from sales capacity and channel math, not from hope. Win rate should reflect competition and category maturity. ACV should match how you actually price.
Where founders go wrong
- Using a fixed % of SAM with no GTM model.
- Ignoring competition and switching costs.
- Assuming year-3 revenue equals year-3 new bookings with zero churn.
- Setting SOM larger than SAM (yes, this happens).
FAQ
- What does SOM stand for?
- SOM stands for Serviceable Obtainable Market — the portion of SAM you can realistically capture given competition, sales capacity, and time (often a 3-year revenue target).
- Is SOM the same as a revenue forecast?
- Close. SOM is usually framed as obtainable market revenue over a horizon, not a monthly board forecast. Still, the math should look like a bottoms-up go-to-market plan.
- What percentage of SAM is a good SOM?
- There is no universal percentage. Early-stage SOMs are often 1–5% of SAM over three years — but only if sales capacity, pricing, and win rates support it. Inventing 'we will take 10%' without a model is a red flag.
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