How to Use TAM, SAM & SOM to Find the Right Market for Your SaaS

Most SaaS companies fail because they chase the wrong market or try to sell to everyone.

I’ve seen too many B2B SaaS startups pour time, money, and effort into broad, competitive markets, only to realize they were never positioned to win. 

Others spend years refining their product without defining who they’re really building it for, leading to slow sales cycles, high churn, and wasted marketing dollars.

Your market dictates your growth potential more than your product does.

• If it’s too broad, you’ll struggle to stand out against well-funded incumbents.
• If it’s too niche, you may run out of customers before you scale.
• If you don’t validate who needs your product the most and why, you’ll waste resources on the wrong audience while competitors take the lead.

But what if you could skip the guesswork and find the fastest path to scalable revenue from day one?

That’s where TAM, SAM, and SOM come in.

These three market-sizing frameworks will help you:

• Identify where real demand exists so you’re not wasting resources on unqualified buyers.
• Narrow your focus to a segment you can dominate so you become the go-to solution.
• Align your GTM strategy with market dynamics so your acquisition, sales, and retention efforts are optimized.

In this guide, I’ll break down how to define your SaaS company’s TAM, SAM, and SOM, how to use them to prioritize the right opportunities, and how to find your first high-traction market segment (your beachhead) to build unstoppable momentum.

If you’re a SaaS founder or executive asking yourself:

• Which customers should we go after first?
• How big is our real market opportunity?
• Where can we gain traction the fastest?

…then keep reading. This framework will help you scale faster, avoid costly mistakes, and build momentum in the right market.

Let’s break it down.

Understanding TAM, SAM & SOM: What Do These Terms Mean?

SaaS start-ups looking to make their market entrance often don't know who to focus on.

It’s exciting when a company has developed a product or service that has proven to be desirable by the marketplace, what we in marketing call demonstrating a product-market fit.

It’s even more exciting when those outside your organization recognize your product’s value and contribute funding to the company's efforts.

Here at Kalungi, we help SaaS companies go-to-market, or expand into new markets, by examining three things: 

1. Total addressable market: the total possible market for your SaaS products and services. This represents the maximum possible revenue you can generate in a market and indicates potential scalability. 
2. Total obtainable market: the portion of the available market that best fits your solution's offerings. Your TOM is a sub-market formed by regulatory, pricing, and operational differences within your TAM. 
3. Serviceable obtainable market: the sub-sector of your market niche that you can realistically target, given the presence of competition, limited resources, and level of market awareness. 

Understanding your SaaS company's TAM, SAM and SOM will give you insight into the funding requirements and efforts you'll need to penetrate your market, while also showing you the opportunity for growth. 

Let's dig deeper.

How to Identify Your SaaS TAM, SAM & SOM

Now that you understand the importance of targeting the right market, it’s time to put these frameworks into action and define your SaaS company’s TAM, SAM, SOM.

Each of these layers helps you narrow your focus, starting from the broadest possible market and refining it down to the segment where your product has the highest chance of success.

By systematically narrowing your focus, you’ll avoid the trap of chasing too many markets at once and instead, concentrate your efforts on the segments where you can drive real traction.

Let’s start with the broadest layer: defining your TAM.

Step 1: Define Your TAM – The Total Market Opportunity

Before you launch or scale your SaaS business, you need to answer a fundamental question:

How big is the total opportunity?

Your Total Addressable Market (TAM) represents the full universe of potential customers who could benefit from your product—if there were no limitations on time, resources, or competition.

Think of TAM as your dream scenario: if every single eligible company adopted your solution, how big would that market be?

For example, if you provide expense management software for nonprofits, your TAM might include:

• Emergency relief organizations
• Religious institutions (e.g., churches, mosques, synagogues)
• Community service nonprofits
• Educational foundations

If there are 50 million nonprofits worldwide that fit your broadest criteria, then that’s your TAM.

Things like an NPS score or churn levels are great ways to find out what parts of the market are a better fit for what you do. 

However, TAM alone doesn’t mean much without context, not every potential customer is a viable prospect. That’s why the next step is to narrow it down to your Serviceable Addressable Market (SAM).

Step 2: Narrow Down to Your SAM – Your Realistic Market

After defining your TAM, the next step is to determine which portion of that market you can actually serve today.

Your Serviceable Addressable Market (SAM) represents the subset of your TAM that aligns with your product’s capabilities, ideal customer profile (ICP), and market realities.

This is what we call product-market fit, or PMF.

SAM accounts for factors like:

• Customer fit: Which segment needs your solution the most?
• Competitive landscape: Where can you win against existing alternatives?
• Operational feasibility: Which prospects can you realistically reach with your current resources?

For example, let’s revisit our expense management SaaS for nonprofits:

• While your TAM includes all nonprofits, your SAM might focus on mid-sized nonprofits ($1M–$10M in annual revenue) that have finance teams struggling with manual expense tracking.
• You may exclude small, early-stage nonprofits that lack budget or large enterprise nonprofits that require complex integrations beyond your product’s scope.

How to Identify Your SAM:

1. Analyze existing customer data. Where are you seeing the strongest retention, upsells, and positive NPS scores?
2. Look for high-value, underserved segments. Which part of your market has an urgent need and few strong alternatives?
3. Factor in go-to-market efficiency. Which segment has a clear, scalable acquisition strategy?

SAM helps you prioritize where to invest sales and marketing resources, and ensures you focus on a realistic, winnable market rather than spreading yourself too thin.

Now, let’s zoom in even further to your Serviceable Obtainable Market (SOM), the lowest-friction path to success.

Step 3: Identify Your SOM – Your Low-Friction Entry Point

Not every potential customer in your Serviceable Addressable Market (SAM) is an ideal fit. Your Serviceable Obtainable Market (SOM) focuses on where you can win first (your fastest path to revenue and traction).

Think of your SOM as the market segment where you can gain a competitive edge quickly, with minimal friction and maximum efficiency.

To define your SOM, ask yourself:

• Which customer segment has the least resistance to buying?
• Where do we already have traction (testimonials, referrals, case studies)?
• Which verticals or geographies have the shortest sales cycles and highest conversion rates?
• Where can we enter with the lowest cost and highest return?

For example, if your TAM includes all nonprofit organizations and your SAM focuses on mid-sized nonprofits, your SOM might focus on religious nonprofits if you already have strong word-of-mouth referrals and an easy path to decision-makers.

Your SOM is about momentum and efficiency. Instead of spreading your resources thin, you focus on a winnable niche, building credibility, and establishing a strong foothold before expanding.

Finding Your First Beachhead: Where to Start for Fastest SaaS Growth

Your beachhead market is the specific niche within your SOM where you can build an early, defensible position—a foundation for scalable growth.

To identify your beachhead:

• Leverage existing customer wins. Where have you already seen strong product adoption and advocacy?
• Look for short sales cycles & high conversion rates. Which segment moves through your funnel the fastest?
• Identify a repeatable GTM motion. Where can you acquire customers efficiently, with a proven acquisition playbook?

Once you’ve established dominance in your beachhead, expansion becomes much easier. Instead of tackling a fragmented market all at once, you win one niche, then expand into adjacent markets.

Why This Matters: The Difference Between Struggling and Scaling

Too many SaaS companies fail because they try to sell to everyone too soon. Going broad too fast is a surefire way to slow growth, waste resources, and lose to competitors who are more focused.

By using TAM, SAM, and SOM strategically, you can:

• Achieve faster traction. Focus on a segment where sales cycles are short and acquisition is cost-effective.
• Build credibility & market authority. Establish yourself as the go-to solution for a well-defined audience.
• Create a scalable GTM playbook. Once you dominate your initial niche, expansion into adjacent markets becomes much easier.

The Key to SaaS Growth: Win Small, Then Expand

Your SOM defines your first battle, the niche where you get early wins, drive word-of-mouth, and build repeatable revenue.

If you try to sell to everyone, you’ll struggle to gain traction. But if you focus on winning a specific, high-opportunity niche, you can scale much faster, with stronger retention, lower CAC, and a clear path to market leadership.

Now that you’ve defined TAM, SAM, and SOM, it’s time to execute your GTM strategy with focus and precision. Let’s explore common mistakes to avoid and how to apply these insights for scalable SaaS growth.

Ready to Go to Market Like a Unicorn?

Understanding your TAM, SAM and SOM means your SaaS company can find the path of least resistance to win and retain your customers by servicing them well. In the end, you might only find one part of the market that passes this test. 

Visualize this exercise by thinking about fit and friction as two dimensions: one about which part of the market is easier to service and has a lower friction.

In this case, maybe it’s easier to sell to a church because there may be fewer decision-makers than it is to sell to the United Nations, a large nonprofit organization (and a great opportunity if you could actually sell to them), but there are so many decision-makers that this would be very hard. 

Where’s the competition? Are there certain parts of the market that have a more competitive presence than others? The market segments with fewer competitors would go to the right of this spectrum.

The difference between stagnation and scale is how well you align your go-to-market (GTM) strategy with your market realities.

At Kalungi, we specialize in helping B2B SaaS companies like yours identify the right market, the right positioning, and the right GTM motion to accelerate revenue and dominate your category.

Book a free strategy call with Kalungi today and let’s map out your fastest path to market dominance.