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Consulting Guesstimate Cases - Street of Walls
Consulting Guesstimate Cases - Street of Walls
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The questions in this chapter are representative examples of Guesstimate Cases. In essence,
these questions involve a short case or analysis in which you must try to estimate a value you
probably had never considered estimating before. The key to these types of problems is to break
them down into logical pieces, walking the interviewer through how you are approaching the
problem, and then try to determine appropriate assumptions for the value of key figures in each
of those pieces.
Guesstimate cases are generally used as part of a firstround interview to warm a candidate up
for a full Business Situation Case later in the interview process. Guesstimate cases are also used
as a way to test quantitative ability, numerical thinking and judgment, and an to arrive at
reasonable assumptions.
With some practice, guesstimate cases are not difficult and once you get accustomed to them,
they are actually quite fun, even though at first they might seem a little scary. Guesstimate cases
will also form part of many full case interviews, so it is important to master them.
Here are some quick examples of Guesstimate Cases so you can get a better sense of what we are
dealing with:
What is Air France’s weekly revenue for the ParistoNew York leg?
How many flat screen televisions have been sold in Australia in the past 12 months?
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How many avocados are used to make guacamole per day in Mexico?
Here are a few key points to keep in mind when answering these questions:
Guesstimate question. The goal is to make reasonable, logical assumptions and if you
are wrong on your assumptions, that is totally fine—after all, some of the figures used to
make the estimation are quite obscure and you do not have access to the data during the
interview. The interviewer is aware of that. If you can logically explain how you arrived at
your assumptions, and highlight which of your assumptions seem the most important to
research, you’re doing well. (As an example, for the Chicago teachers question, you might
not know the population of Chicago to start with—it is about 2.7 million. However, even if
your estimate is 1 million or 10 million, your logic in estimating the correct answer can still
be sound.)
As you progress through the case, round assumption numbers up and down so that
the calculations are less difficult (also use percentages where applicable that are easy to
calculate without a calculator). In the above example, use 3 million even if you know that
Chicago had 2.7 million people. Keep the numbers simple, as the interviewer will be quite
impressed if you get a result that is reasonably close to his or her estimate.
Importantly, as with all cases, be very structured in your approach and write out
your numbers and assumptions in a clear manner. Be sure to clearly label the
units and variables. This is also important if the interviewer follows up with the question
“What if we changed that assumption?” This question is not an indication that you’re
bombing the Case—it might simply mean that your initial assumption was off, or the
interviewer might be testing your ability to think flexibly under pressure.
Stay composed, as these cases should not trip you up, especially with sufficient practice.
They are all quite similar after you have done a few practice questions.
Communicate your process and answer succinctly and articulately. Do not be
afraid to acknowledge mistakes during the process—it shows maturity and composure.
Virtually all of these questions can be grouped into TopDown or BottomUp (often
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answer. For example, consider the question about the number of schoolteachers in
Chicago. A simple way to approach it would be to start with the population of
Chicago, then estimate what percentage of the population is of student age, and
then estimate the number of students per class. Using this, you would arrive at an
estimate of the number of school teachers, because at any given time there is
(generally) exactly one teacher per class. To show your ability to be creative and
think outside the box, you could also attempt to account for retired teachers and
substitute teachers.
BottomUp (GroundUp) Questions: For these questions, rather than starting
from the “top” with a highlevel figure such as population, the best approach is to
start from the “bottom”—some lowlevel statistic, such as Revenue per customer,
and build your way up to the answer. For example, consider the question pertaining
to the monthly revenue of a hair salon. In this case, we’d recommend you work out
the revenue for a week and then multiply that by four (or if you are quick at
multiplication, 4.3). You could start with an assumption regarding the average price
per client visit, and then estimate weekly volume by assuming the number of chairs
in the salon, the number of hours it is open per week, and the average number of
clients chair per hour. To show your ability to be creative and think outside the box,
you could also add revenue for hair salon products sold. You may also want to break
the estimate into male and female clients, as male clients at hair salons tend to
spend less money per visit but also take less time on average.
Step 1: Ask questions if the request is not totally clear. Take a minute or two to decide
how to structure your answer—this is the period in which you determine whether it is
BottomUp or TopDown question, how you will break the question down into pieces, and
the assumed values you will use for each of those pieces. Though you can interact and
direct questions to your interviewer, in these cases it is not useful to ask for help on your
assumed values as often his or her guess will be an educated guess, just like your own
guess. (And even if you assumed value is off the mark, it is far less important than being
able to structure and articulate the response, correctly calculate an answer based on the
assumed values, and provide insight for which assumptions you’d ideally like to research
further.)
Step 2: Mentally doublecheck the “Guesstimated” values that you will apply to the pieces
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of the calculation you developed in the first step. Note that in Guesstimate Cases, a
population figure is very commonly part of the solution process (whether it be the U.S.
would need to estimate the number of children of student age. Keep in mind that any
Age
Geography
Income & assets
make your math easy. Also, if you find that you are estimating multiple figures to make the
math easier, try to balance “rounding up” with “rounding down.” For example, if an
answer involves multiplying 44 by 5,300, you will get a more accurate answer with 50 ×
5,000 = 250,000 (one rounded up, and the other rounded down) than 40 × 5,000 =
200,000 (both rounded down). (The exact answer is 233,200). This effect tends to get
larger if you have 3 or more numbers to round, so always be mindful of the degree and
Step 4: Identify any additional creative elements that could further refine your answer, if
relevant. For example, in the hair salon case, we saw that Revenue might be boosted from
the sale of hair care products. Additionally, you should tell the interviewer which pieces of
your estimate seem most vital to research further—those that seem to have the highest
degree of sensitivity in determining the correct answer, or those in which you have the
most uncertainty as to whether your estimate was reasonably close. In the Chicago
schoolteacher example, if you had no sense whatsoever of the population of Chicago, you
might indicate that you’d like to look up that number and that your answer depends
HOW MANY CUPS OF COFFEE WERE CONSUMED IN THE UNITED STATES IN THE PAST WEEK?
Start by clarifying the question, then identify the variables to apply to this problem.
Number of cups in the past week: This equals number of cups per day × 7 (for 7 days
per week). Mention to the interviewer that your assumption treats each day equally,
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although you would get points for mentioning that there are likely fewer cups consumed
on the weekend, as people are not in the office and in general might feel less of a need to
drink coffee.
Percent of the population that drinks coffee: this would be an educated guess.
Assuming 300 million people in the U.S., we could further assume that 20% are children
that (we hope) do not drink coffee. We could also guess that another 20% of the
population does not drink coffee at all (perhaps they prefer tea or other beverages, or just
water).
Number of cups per day: here our guess is that of the remaining 60% of people, half
drink 2 cups per day, a quarter drink 4 cups per day, and a quarter drink 1 cup per day.
This averages out to 2 × 0.5 + 4 × 0.25 + 1 × 0.25 = 2.25 cups per coffee drinker per day.
405 million cups × 7 days per week = 2.84 billion cups per week (you could
round it to approximately 2.8 billion cups)
Note: the interviewer could then ask questions around how many cups are drunk at home or the
office versus bought from a store, or other similar variations. The interviewer might also ask
your thoughts on coffee trends and also how much revenue this would mean, etc.
WHAT WAS THE REVENUE FOR FLAT SCREEN TELEVISIONS SOLD IN AUSTRALIA IN THE PAST 12 MONTHS?
Your first thought might be, “Why Australia? I am not applying for the Sydney Office of
Consulting becomes more global in nature (for example, advising firms on entering or
performance in foreign markets, or working directly with foreign clients). While you will
not be expected to know Australia’s population, your estimate will say something about
Start by clarifying the question, then identify the variables to apply to this problem.
Population of Australia: Approximately 23 million people. (Editor’s note: I once
received a Case Study question involving this figure and my estimate was far too high, but
I still did well on the case because my thought process was transparent and otherwise
accurate.)
Assume that the average household is 3 people. It is worth noting that families
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probably have more than 3 people, but this is balanced out by people living alone, such as
students and young professionals. Here is a good example of rounding: you can say 8
might say that “seems reasonable” or “you should try a higher/lower number.” You might
also note that you believe there was nothing special about last year in terms of television
Assume an average sale price of $600. Again, the interviewer might say that “seems
reasonable” or “you should try a higher/lower number.” He or she may even ask you to
break this down into groups, such as “highend flat screens” and “smaller flat screens” with
different average prices. However, $600 seems like a reasonable average across higher
end TVs, which might cost more than $1,000, and smaller flat screen TVs, which can sell
for $200 or even lower.
Therefore, 2 million × $600 = $1.2 billion annual Revenue for television sales in
Australia.
To show your creativity and business thinking you could have also discussed the market
for resold used televisions and the Revenue that comes from that (this might reduce your
estimate of the market size by reducing the average sale price; if the interviewer insists
that the question should only include new televisions, then keep the average sale price
about trends in television sales,” just to see how you think on the spot.
Start by clarifying the question. In this case you might want to confirm whether the
question is how many iPhones are in operation, or how many are being used at that this
current moment. (The interviewer would probably explain that he or she means “in
operation”.) Once the question is clarified, identify the variables to apply to this problem.
Population of China: Approximately 1.4 billion people.
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There are several different approaches from this point; one approach is to make
assumptions around the number of people that can afford iPhones rather than
extraordinary economic growth, you might assume that the majority of the population is
still very lowincome and cannot afford an iPhone. Thus, you might estimate that 20% of
the population could afford an iPhone.
Therefore, the total potential market size is 20% × 1.4 billion = 280 million iPhones.
What percent of this total market size is penetrated? There are many competing products
that are cheaper, but perhaps you’ve read that the Chinese are very brandfocused and
that Apple has an extremely trusted and desirable brand in China. Therefore you
estimate that 20% of this segment is currently using an iPhone.
Using these estimates, 20% × 280 million = 56 million iPhones are currently being
used in China.
A followup question might be something along the lines of “Are there are more iPhones in
operation in the U.S. or in China?” We’ll leave you to try and figure that one out yourself.
Another followup question might be how you would check the accuracy of your
assumptions and response (in this case, perhaps by reviewing the Apple annual report or
Guesstimate Example #4
Start by clarifying the question, then identify the variables to apply to this problem.
Population of France: Approximately 60 million people.
Assume an average household is 3 people. This leads to 20 million households (60
million ÷ 3).
Assume 20% of households have no car, as they are in urban cities such as Paris or
Lyon.
Of the remaining households, assume an average of 1.5 cars per household.
Therefore, there are approximately 80% × 1.5 × 20 million households = 24 million cars in
France.
Assuming a replacement rate of every 6 years, there will be (24 ÷ 6) = 4 million
cars replaced per year.
Of these 4 million, how many are Peugeot brand? You could suggest that the French are
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quite patriotic, so perhaps 20% of the 4 million cars purchased each year are
Peugeot.
Therefore, you estimate that (20 × 4 million) = 800,000 Peugeot cars are purchased in
for used cars (this is assuming similar pricing, currencyadjusted, to that of U.S. cars).
Using these assumptions, (560,000 × $30,000) + (240,000 × $10,000) = $16.8 Billion +
$2.4 Billion = $19.2 Billion.
Therefore, total Revenue of Peugeot cars sold in France per year is approximately $20
Billion.
WHAT IS THE REVENUE FOR THE BOARD GAME MONOPOLY® SOLD IN INDIA PER YEAR?
Start by clarifying the question. In this case, intelligent questions might be:
sold in India.”)
From this, perhaps the interviewer might further explain that in India there is
a children’s version and the regular version, and she would like you to
estimate the revenue of the children version, which targets 815 year old
children.
Once the question is clarified, identify the variables to apply to this problem.
Population of India: Approximately 1.2 billion people.
Percent of population that is aged 815 in India: Assume 15%.
A potential question at this point for the interviewer: How popular is Monopoly compared
to other games? (Interviewer: It is gaining a lot of interest and is a popular board game
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provide the number; otherwise, you might need to estimate based on U.S. prices and
dollarrupee exchange rates)
Using these estimates, the annual Monopoly® sales in India are as follows: 180 million ×
50% × 20% × 2 × 10% × Rs 600 = Rs 2.16 billion annual Revenue.
Interviewer: If the exchange rate is U.S. $1 to 60 Rupees, how many dollars is that?
made, this estimate could be off significantly; in particular, the estimate is highly sensitive
to the percentage breakdown assumptions for the relevant demographic (percent of 815
year olds living where the game is available; percent of those individuals who play board
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