Ballpark Figure

What is the definition of a Ballpark Figure?

Definition

A ballpark figure, also known as order of magnitude, is a numerical approximation or estimate of the value of a thing to fall within a particular range. Ballpark figures are just rough estimates that could be higher or lower than an actual figure, therefore, not to be taken accurately.

Understanding a Ballpark Figure

The purpose of a ballpark figure is to enable the parties involved to estimate the rough amount of an entity, so that, progress can be made towards other negotiations. In the case of numerical uncertainties of the true cost or value or a project or product, a ballpark figure is brought into the picture to give the parties a working figure until the actual figure is certain.  This financial strategy is mostly used by accountants, economists, salespersons, and other finance-related experts. It is also used by stockbrokers to estimate the amount of money a client is likely going to have at a future date based on the current or expected growth rate. In sales, a sales rep can use a ballpark figure to estimate the possibility of a potential actually buying a product.

Ballpark Figure is not limited to corporate accounting and financial professionals as it can be applied in daily life as the need arises. Such as estimating how much it would cost to restock the house by pay-day or how much it would cost to fund a master’s degree program in the next seven months. It can also be adapted in technology as a form of a market survey or market test-run to ascertain how long it would take a particular product to circulate the market.