How would you estimate the cost of Boeing 747?

brain teaser
New answer on Feb 10, 2020
1 Answer
1.2 k Views
Anonymous A asked on Feb 09, 2020

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Ian
Expert
Content Creator
updated an answer on Feb 10, 2020
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

That's a tricky one and there are a few options. Like most market sizing questions, there are a number of approaches and you need to pick the approach that best uses your existing knowlege in this world. The main options I see are:

1) Boeing company breakdown (top-down). Think about Boeing's market cap or annual revenue. Then break down their various parts of the business (i.e. Commercial, Defense, Space, etc). Then, within Commercial, think about how many types of planes they sell and % of that business the 747 makes up.

2) Airline company breakdown (top-down): Think about a given airline (i.e. Delta) and their costs. Follow a similar logic to approach #1

3) Cost comparison: Look at costs of lower-end and higher-end products. I.e., talk about high-end cars, private jets, figher jets, space shuttles, etc. You probably have an idea of around what each of these cost. Then put commercial planes on this scale. Within there, come up with a range for the Boeing 747

4) Components summation (bottom-up): This one is tough, and I wouldn't do it, but if you have an engineering background you might prefer it. Think of the sum-of-parts for a Boeing 747. I.e. 4 jet engines, the body/hull, fitout (electronics, etc.), R&D write-down, etc. From here you can think of a cost of production and put a nice margin on top

Again, it's less about "The Right Approach" and more about which approach shows clear/organised thinking and appropriate assumptions.

(edited)

Was this answer helpful?
Ian gave the best answer

Ian

Content Creator
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep
819
Meetings
54,295
Q&A Upvotes
158
Awards
5.0
99 Reviews