Total addressable market (TAM) is the overall revenue opportunity available or foreseen for a specific product or service, taking into account the future expansion scenarios.
Assessing the total addressable market is crucial for startups as well as existing enterprises because this estimate enables them to prioritize the available markets, customer segments, products and business opportunities by comparing the potential for revenue generation and profits. Finally, it leads to a viable value proposition offering to potential investors and buyers of businesses.
Total adressable market is also known as global total market, even if the proposed business is unable to serve some parts of this market.