Resource: Estimating Greeting Card Sales

Print Background Essay

There are many instances in which it is helpful to estimate, or make a reasonable guess about a numerical value. Sometimes a value is just not known, as is the case with events happening in the future, so it may be necessary to predict by estimating. This is the case with predicting rainfall amounts or the total cost of an upcoming trip. In other cases, using estimation is helpful in doing quick mental calculations or checking an answer that you've already calculated.

When making estimates, it is useful to round numbers up or down to simplify calculations. When you round numbers, you add to or subtract from a number to reach a number that is easier to work with—perhaps a whole number or a multiple of ten, for example. The place value to which you round each number depends on the specific problem at hand and how good an estimate you need, but you should always round each number to the same place value. If you are dealing with money, sometimes it is easier to round to the nearest dollar. For example, if you are purchasing a shirt that costs $39.50 and you want to calculate how much it costs after applying a 25% discount, it's easier to estimate the cost by rounding the price up to $40 and taking 25% off of that.

A good estimate will always be reasonably close to the exact result, and you have control over how close it actually is. By selecting the place value to which you round, you can increase or decrease the accuracy of an estimate. For example, if you are adding 111.32 + 237.19 +156.98, a quick but less accurate estimate can be found by rounding to the nearest ten: 110 + 240 + 160 = 510. A more accurate estimate could be found by rounding to the nearest dollar: 111 + 237 + 157 = 505. And to get really close, you could round to the nearest ten cents: 111.30 + 237.20 + 157.00 = 505.50. Of course, this last estimate is very close to the actual answer and requires almost as much work as finding the actual sum, so it isn’t terribly helpful. But it all depends on how close you want your estimate to be. In this example, some numbers were rounded up and some were rounded down. But if you want to be sure that you overestimated the result (for instance, if you want to make sure you have enough money for a purchase), you would round each number up. On the other hand, rounding each number down will cause you to underestimate, which might be beneficial in some situations.

To learn more about estimating costs, check out Estimating Costs, Estimating Profits and the lesson plan Estimating Profit from a Job .

Print Questions for Discussion

• Why did Harry become suspicious of the sum shown on his calculator?
• What process did Harry use to estimate the total?
• What mistake did Harry made when he first calculated his total sales?
• Do you use estimation in your life? Give an example.
• If you were going to start a business selling greeting cards, what first steps would you take before you bought the cards?