SHRI RAM CONSULTING &

RESEARCH CENTRE

Presents

INTRODUCTION TO
GUESSTIMATE

2024
GUESSTIMATES APPROACH

INTRODUCTION TO GUESSTIMATES

A guesstimate is a combination of guess and estimate. Guesstimates are a type of interview

question that test your ability to make reasonable assumptions and estimations based on
limited information. They are often used to test a candidate’s analytical and problem-solving
skills. The purpose of guesstimates is not to find the exact answer, but to show how you
approach a complex and ambiguous problem, how you break it down into simpler parts, how
and results. you use logic and data to support your assumptions, and how you communicate
your reasoning lacinia.

METHODOLOGY

Top-down A top-down approach is a way of solving a guesstimate problem by starting

approach with a large or general population and then applying filters or ratios to
narrow down to the desired segment or group. For example, if you want to
estimate the number of people who wear glasses in India, you can use a top-
down approach as follows:

Start with the total population of India, which is about 1.4 billion. Assume that the percentage of
people who wear glasses in India is 20%. Here, the figure 20% will arrive after taking various
assumptions and estimations to narrow down the desired segment. Multiply the total population by
the percentage of people who wear glasses to get the answer: 1.4 billion x 0.2 = 280 million people.

Bottom-Up
Approach A bottom-up approach is a way of solving a guesstimate problem by starting
with a small or specific unit and then multiplying or scaling up to the desired
level or group. For example, if you want to estimate the number of pizzas sold
in New York City in a day, you can use a bottom-up approach as follows:

Start with the number of pizzas sold by a single pizza shop in a day, which is about 100.
(100 figure will be arrived after making assumptions and estimations)
GUESSTIMATES APPROACH
METHODOLOGY

Assume that there are 1000 pizza shops in New York City. (1000 figure will be
arrived after making assumptions and estimations) Multiply the number of pizzas
sold by a single pizza shop by the number of pizza shops in New York City to get
the number of pizzas sold in New York City in a day: 100 x 1000 = 100,000 pizzas.

Demand-Supply Demand Side: This approach for market sizing is based on estimating the
Approach number of customers in the target market and units consumed per
customer in a given time period.
Supply Side: This approach for market sizing uses the supply value chain
to estimate production quantity based on raw materials or number of
factories and further extrapolating.

GENERAL APPROACH WHILE SOLVING A GUESSTIMATE

To solve a guesstimate question, you can follow these steps:

Clarify the question: Make sure you understand what the question is asking and define the scope and terms of
the problem. For example, if the question is about the number of cars in Delhi, you should ask whether it includes
taxis, buses, trucks, motorcycles, etc., and whether it refers to the city or the metropolitan area.
Structure the problem: Identify the main factors or variables that affect the answer and organize them into a
logical framework. For example, you can use a top-down approach (start with a large population and apply
filters or ratios) or a bottom-up approach (start with a small unit and multiply or scale up). You can also use a
combination of both methods.
Make assumptions: Based on your framework, make reasonable assumptions or guesses about the values of the
factors or variables. You can use your own knowledge, common sense, or external sources (such as online data or
reports) to support your assumptions. You should also explain why you chose those values and how confident you
are about them.
Calculate the answer: Using simple math, calculate the answer based on your assumptions and framework. You
should round up or down your numbers to make the calculation easier and avoid decimals or fractions. You
should also keep track of your units and conversions.
Check your answer: Once you have an answer, you should check if it makes sense and is within a reasonable
range. You can do this by comparing it with other known facts or benchmarks, or by using a sanity check (such as
dividing or multiplying by a factor of 10). You should also identify the sources of uncertainty or error in your
answer and how they can be reduced or improved.
Present your answer: Finally, you should present your answer in a clear and concise way, summarizing your main
steps, assumptions, and results. You should also state any limitations or caveats of your answer and suggest
further steps or questions for further analysis.
GUESSTIMATES APPROACH

HERE IS AN EXAMPLE OF HOW TO SOLVE A GUESSTIMATE QUESTION USING

THESE STEPS:

Question: Estimate the Number of B.Com (Hons) Students at Delhi University.

1. Clarify the question:
We assume this question refers to full-time undergraduate B.Com (Hons) students at Delhi
University (not distance learning), and that the total student enrollment includes all streams.

2. Structure the problem:

We can use a top-down approach to estimate the number of B.Com (Hons) students by
determining the proportion of commerce students and estimating the percentage pursuing
B.Com (Hons) based on available data.

3. Make assumptions:
We assume that:
The total enrollment at Delhi University is 70,000 students.
35% of the students opt for commerce-related courses (Commerce, Management, and
Others).
92% of commerce students are enrolled in general commerce programs.
Of these commerce students, 55% choose B.Com (Hons), while the remaining 45% take
other commerce-related degrees.

4. Calculate the answer:

The number of commerce students = 35% of 70,000 = 24,500 students.
Commerce students enrolled in general commerce = 92% of 24,500 = 22,540 students.
B.Com (Hons) students = 55% of 22,540 ≈ 12,340 students.

5. Check your answer:

The number of B.Com (Hons) students seems reasonable, as it represents a significant
portion of commerce students, given the popularity of this program.

6. Present your answer:

Based on our assumptions and calculations, we estimate that there are approximately 12,340
students enrolled in B.Com (Hons) at Delhi University.

Click here for a video reference for the explanation of a guesstimate

 CHEAT SHEET

INDIA

142Cr 3.2M Km Sq.

Population Total Area

65+
7%
55-65
8% 0-14
26%

45-54
11%
Female
Male 48%
52%

35-44
14% 15-24
18%

25-34
16%

Gender Divide Age Divide

Hindu
Urban
36%
Muslim

Christian

Rural
Others 64%

0% 20% 40% 60% 80%

Rural-Urban
Religion Divide
Divide
 CHEAT SHEET

1250M 1000M $3.75T

Internet Smartphone GDP Of India
Penetration Penetration

Agriculture
15% 40%

30%

20%

Service
55% 10%
Industry
30%

s
ed

as
rs

t
riv

en

Cl
0%
re

ch
p

flu

e
De
pi

Ri

dl
As

Af

id
M
GDP Divide Income Divide

Average Household Size

Urban - 4 Members
Rural - 6 Members Female
45.8%
Male
54.2%

77%
Literacy Rate
Literacy Divide
CHEAT SHEET

DELHI

3.3Cr 2.8Cr 1500Km Sq.

Population Internet Penetration Total Area

City Population Area

Mumbai 2 Cr 600 Sq. Km

Kolkata 1.5 Cr 200 Sq. Km

Chennai 1 Cr 400 Sq. Km