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What is it?

This is one of the most popular question types you will get in a case interview. These questions ask you to estimate or to smartly guess a quantitative variable relevant to the case you are solving. With a “guesstimate” question, you to estimate the size of a market, it is called a market sizing question. In terms of approach, there are no differences between guesstimate and market sizing questions. There are many tips you can apply. An example of a guesstimate question: How many people wear red in New York on a typical Monday? Skills tested: It is the way you approach and solve the problem that matters, not the final answer that you give out.

Strategy

  • Step 1: Clarify the question, make sure you and the interviewer are on the same page on every assumption.
  • Step 2: Break the problem into smaller pieces in a MECE way.
  • Step 3: Use Estimation and Judgement to solve each piece.
  • Step 4: Consolidate all of those pieces into a final conclusion.

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Illustration of the Strategy

Let’s solve the above question example using the strategy we just introduced. Question: How many people wear red in New York on a typical Monday?

Step 1 – Clarification:

How do you define “wear red”? – If any cloth on a person is red, he / she is considered as “wearing red”.
If a person wearing red goes out more than once, do we double count them? – No!
“New York” here refers to New York City or the state of New York? – New York City.

Step 2 – Breaking down the problem:

OK, so here is how I would want to solve this problem. The number of people wearing red in NYC on a typical Monday will be determined by these following factors: How many people are there in NY? What are the chances that people will wear red?
This depends on two smaller factors: How many pieces of clothing people wear and their preference in color.

Step 3 – Solving each piece:

Work with the interviewer to answer and estimate each of those elements.
Population is about 20 million
Chances: 5% staying at home, 70% going out once, 25% going out twice.
Those staying at home have 2 pieces of clothing (pants and shirt); those going out once have 5 pieces, and those going out twice will therefore have 10 pieces.
There is no specific preference on color.

Step 4 – Consolidating:

Let’s analyze the number of people wearing red from each group.

  • Staying at home: 1,000,000 * 2 * 1/10 = 200,000. 1,000,000 people have 2 pieces of clothing. Chance of having red in each piece: 1/10 (7 color + gray + black + white)
  • Going out once: 14,000,000 * 5 * 1/20 = 3,500,000. 14,000,000 people have 5 pieces of clothing. Chance of having red in each piece: 1/20 (on Monday, most of these people go to work, thus black and white will be the main colors they wear)
  • Going out twice: 5,000,000 * 10 * 7.5% = 3,750,000. 5,000,000 people have 10 pieces of clothing. Chance of having red in each piece: 7.5% (the first trip is probably the business trip: 1/20; the second trip is the casual trip: 1/10)

So in total: there are about 7.5 million people in NYC wearing red on a typical Monday.

Other guides on preparation

Practice presenting
It is a lot harder to do guesstimate questions in front of an interviewer. Thus, as you practice this question type at home, try to speak out loud as if you were presenting to an interviewer.

Practice with numbers
In addition to having a good approach, another key to succeeding at guesstimate questions is your ability to do math quickly and accurately. Be sure to visit our materials on consulting math

Practice everywhere
Whenever you have some free time (driving, sitting on buses, etc.), ask yourself random guesstimate questions and try to do them. Back when I was in college, every time I had to do a boring task (e.g: laundry) I practiced guesstimating: How many people are there in this dorm? What is the monthly operating cost of maintaining this laundry room? How much water does this room use per month?… You should develop that habit too!

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  • Tanvi

    Very useful and straightforward approach!

  • Julian

    great example! I tried the question before reading the key. Missed that there are people who go out twice

  • Hank

    Your math is wrong in the video case. The way you stated your assumptions actually requires a binomial distribution, the answer is about 9 million, not 12.2 million. Otherwise great video!

    • MConsultingPrep

      Hi Hank, great job catching that flaw! We are aware of this after the video has been published.
      However, we thought the value of the video is the spirit and the overall methodology, not necessarily the specific example. So we think it is still helpful for a lot of people.
      For viewers who were able to catch that, we have strong confidence in your capability to do well in consulting interviews. Thanks for your participation!

      • Sanket Jain

        Hi, I guess the point is that if a person has already wore red preciously, and wears red again, we are counting it twice. So the answer is more than the desired. Please correct me if I am thinking on the wrong lines.

  • Riddhi

    Very well explained!!! More than the actual answer, the methodology followed is very useful!!! Thanks

  • rahul singh

    can someone answer how to calculate many people wear wrist watch in a country. Its really important if you just can give guideline. pls reply on [email protected]

    • Julian

      I’d break down the population into age ranges and genders:
      – 0 to 5: no one wears watches these ages.
      – 5 to 15: they probably have funny color toy watches. My guess is the numbers of female and male are nearly the same, and they don’t have phones yet (hopefully), so the need for watches is high. About 50%?
      – 15 to 30: They use phones to check time more. And male is more likely than female to wear watches, then 10% for female and 25% for male?
      – 30 to 60: The same, except high class men might wear watches as accessories, so a higher propotion for male of these ages. 10% for female and 40% for male?
      – 60 up: They don’t go out much so don’t need watches that much. My guess is 10% for female and 25% for male
      Then decide how many of the population belongs to each bracket and then how many of them wear watches. The crucial thing is to double check the numbers with your interviewer. If he is ok with it, no need to over complicate it.

  • Lauren

    Hi, I’m new to this blog and need to brush up on my math skills… can someone explain why for “people going out twice”, we are multiplying by 7.5%? I added 1/20 and 1/10 and ended up with 15%… are we cutting that 15% in half? If so, why? Thanks!

  • Ekaterina

    Hi! And still it seems to me you are double calculating. You approached the event of going out twice as a single event. And people who are wearing red in both occasions are calculated twice. I guess it should be P(A) + P(B) – P(A&B). No?

  • Jocelyn

    In market sizing or guesstimate questions should we promt the interviewer for more data or information along the way as we might in other strategy cases? Is this something to be asked in every case or less so in guesstimate cases, I do see you asked clarifying questions in the beginning.