Top-down and bottom-up

Step 2 of the five-step estimate is where most of the marks are: turning a vague question into an equation. There are two basic ways to build that equation. This lesson shows both on the same question, explains when to lead with each, and shows how to use one to check the other.

#The two directions

Top-down starts from a large, known population and narrows it with shares and rates until you reach the thing you want.

US adults → share who do X → how often → price → market

Bottom-up starts from one unit you can picture clearly (one store, one customer, one machine, one salesperson) and multiplies it up by how many of those units exist.

One gym → members per gym → price → number of gyms → market

Both are legitimate. Interviewers do not have a preferred direction. They want to see that you chose one on purpose and can sanity-check it with the other.