What is Total Addressable Market and How is it Used

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Total Addressable Market, or TAM, refers to the maximum revenue opportunity available for a product or service. It represents the potential size of a market if a company were to achieve 100% market share. TAM is a fundamental concept in finance, especially for evaluating investment opportunities and setting strategic direction. Approaches to estimating TAM include the top-down approach, which starts with a broad market size and narrows it down, the bottom-up approach, which calculates potential revenue based on granular customer data, and the hybrid approach, which combines elements of both.