[ad_1]
SOM stands for “Serviceable Obtainable Market,” which is the estimated market dimension which you can seize.
What’s SOM (Serviceable Obtainable Market)?
SOM is an estimate of the portion of your serviceable addressable market which you can really seize.
It takes under consideration elements corresponding to:
- Market Dynamics
- Competitors
- Buyer Retention
- Trade Traits
Consider it as what you’ll be able to really seize, given all of the dynamics in your favor and towards you.
This will help you higher align your technique and decide how a lot effort to place into advertising or product growth.
The massive distinction between SAM and SOM is that SAM assumes you may have the sources to seize your goal market, whereas SOM takes under consideration the precise dynamics available in the market.
How Do You Calculate SOM
SOM is calculated by taking final yr’s market share and multiplying it by this yr’s SAM.
Step 1: Discover final yr’s market share.
To search out final yr’s market share, you have to divide final yr’s income by final yr’s SAM.
Utilizing the $100,000 SAM from above, let’s faux your income final yr was $40,000.
Final Yr’s Income/Final Yr’s SAM = Final Yr’s Market Share
40,000/100,000 = 0.4 or 40% = Final Yr’s Market Share
Step 2: Discover Your SOM
Let’s say your SAM this yr is $150,000.
Final Yr’s Market Share x This Yr’s SAM = SOM
0.4 x $150,000 = $60,000 = SOM.
On this instance, your SOM can be $60,000. Given all of the dynamics available in the market, that is the estimated market dimension you’ll be able to seize.
SOM Examples
Utilizing the earlier pet food enterprise, let’s faux your SAM this yr was $50,000,000, and you determine that your final yr’s market share was 0.35 or 35%.
So your SOM this yr can be 0.35 x $50,000,000 = $17,500,000.
Bear in mind, this determine is simply an estimate and might change relying on business tendencies and different elements.
[ad_2]
