Disclaimer: Originally published in October 2017. It is being republished since it still remains an interesting topic till today.

As per the definition of Wikipedia:

A guesstimate is defined as an estimate made without using adequate or complete information or an estimate based on a mixture of guesswork and calculation.

The word is a blend of guess and estimate. Guesstimate is not knowing about the accurate number but the approach that is followed.

It’s not about accuracy but logic. There is nothing such as a right or a wrong approach, what matters is a feasible and a structured approach. If a number is hard to get, you guesstimate.

A five-step approach-

1. Clarifications- It’s always better to clarify and make assumptions regarding certain things.
2. Breaking down the problem- Breaking down the existing unit into smaller units and then preparing a consolidated answer. Identify the mathematical factors behind the problem.
3. Consolidating- It’s always preferable to use round figures. This provides simplicity in calculations.
4. Sanity Check- Before submitting the final answer, it is always advisable to check that the answer isn’t a humongous one or too small which is far away from reality.
5. Try to use variables like: the population of India, population distribution by age, average family size, population distribution by income, rural: urban population ratio, sex ratio.

In the current article, we would only look into the demand side of things rather than the supply side. By demand, I mean, we will solve the problem by thinking from a consumer point of view and not a supplier.

Let us get the ball rolling and solve some mind-boggling guesstimates:

### 1. Estimate the number of Godrej air conditioners in Delhi

Solution:

Let us assume that the population of Delhi is 2 crore. Now, we will divide the population on the basis of income-

– Below Poverty Line (30%- 60 lacs)

– Lower Middle Class (20%- 40lacs)

– Upper Middle Class (30%- 60lacs)

– High Income Group (20%- 40lacs)

It is safe to assume that none of the BPL people will own an AC.

Out of the 20% in the lower middle class, we have assumed only 30% will own an AC- 12 lacs

Out of the 30% Upper Middle class, we have assumed all of them will own AC- 60lacs

Out of the 20% in the high-income group- all of them will own an AC- 40lacs.

Lower middle income- 1 AC per house – 12 lacs.

Upper middle income- 10% will have 3 ACs in each house. Remaining 90% will have 2 ACs per house. ( 18 lacs+ 1 crore)

High-Income group- 4 ACs per house. (100%)- 160 lacs.

Since Godrej is a low-end product, only 40%  from LMC, 15% from UML, 10% from the high-income groups will buy Godrej air conditioners.

4 lacs+ 45 lacs+ 16lacs= 65lacs.

Since the avg family size of a family is 4, we divide the total number of Godrej air conditioners by 4.

Hence, the final answer is 16.25 lacs.

### 2. Estimate the number of people traveling in UBER taxi on a weekday in Delhi

Solution:

Let us assume that the population of Delhi is 2crore.

Now, we will divide the population on the basis of daily commuters and non-daily commuters:

Daily Commuters (60%-1.2Cr)

Daily Commuters (60%-1.2Cr)

Non-Daily Commuters (40%-80Lacs)

Non-Daily Commuters (40%-80Lacs)

In Delhi, a person gets few options to travel and they are:

• Own Vehicle (30%-36Lacs)
• DTC buses (10%-12Lacs)
• Metro (40%-48Lacs)
• Taxi/Auto (20%-24Lacs)

Now, amongst 24 Lacs commuters of Taxi and autos, approximately 40% of them will be using taxis i.e. 9,60,000.

Further dividing, an individual has an option out of OLA, UBER (since they are the leading companies) and others. So,

• OLA (40%- 3,84,000)
• UBER (50%-4,80,000)
• Others (10%-96,000)

TOTAL-4,80,000

Non- Daily Commuters:

• Housewives (40%-32Lacs)
• Up to 18 (20%-16Lacs)
• 18-25 (10%-8Lacs)
• 60+ (30%-24Lacs)

On that particular day, only a percentage of people will be traveling and be using Taxi. So, assuming:

• Housewives (5%-1.6Lacs)
• Up to 18 (10%-1.6Lacs)
• 18-25 (5%-0.8Lacs)
• 60+ (10%- 2.4Lacs)

Amongst them how many use UBER:

• Housewives (60%-96,000)
• Up to 18 (50%-80,000)
• 18-25 (50%-20,000)
• 60+ (50%- 1,20,000)

TOTAL-3,16,000

No.OF USERS = 7,96,000

If you want to know more about guesstimates, do let me know.­­