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Total Addressable Market (TAM)

The total addressable market (TAM) is the total potential revenue for a product or service. It's used to assess the feasibility of developing a new product or expanding into a new market. To calculate TAM, you need to consider both the number of potential customers and the average revenue per customer. For example, if you're launching a new line of organic baby food, your TAM would be the total revenue from all organic baby food sales in your target market. To assess the viability of your product, you would then compare your TAM to the development costs and potential profits. If your product has a small TAM but high development costs, it may not be worth pursuing. Conversely, if your product has a large TAM but low development costs, it could be very profitable. In either case, further market research would be necessary to make a final decision.

The total addressable market (TAM) is the total potential revenue for a product or service.

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