rule of thumb

(redirected from rules of thumb)
Also found in: Dictionary, Thesaurus, Idioms.

rule of thumb

an aid to decision-making involving the use of conventions or mechanistic formulas to determine prices, production schedules, advertising budgets etc. Rules of thumb are used as rough guides or approximations when, because of uncertainty, it is impossible to determine optimal solutions. Many firms, for example, use cost-based formulas to set prices, adding a conventional unit profit mark-up to costs, in the absence of totally reliable information about demand. Similarly, firms often set the value of their advertising budget as a fixed percentage of their sales revenue. See COST-BASED PRICING, UNCERTAINTY AND RISK.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

rule of thumb

a rough-and-ready decisionmaking aid that provides an acceptably accurate approximate solution to a problem. Where refined decision-making processes are expensive in terms of information-gathering and information-processing, then rules of thumb may be justified. For example, COST-PLUS PRICING may be used in practice by firms in the absence of sufficient knowledge about future demand and cost conditions to permit marginal weighting of revenues and costs to achieve an optimum decision. See RISK AND UNCERTAINTY.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
In the United States, a number of rules of thumb have evolved about stock investing in particular and the direction of the economy in general.
This is one of the most basic rules of thumb, and it relates movement of surface systems to the jet stream.
Our results prove that in the bow-hunting and archery world, we have some solid rules of thumb that stand up under rigorous testing.
Then, let us get someone to conduct research to move from the rules of thumb practiced by crafts, to the research and theory supporting best practices used by professions.
Stories are how we learn." As a result, Rules of Thumb is elevated from just another business advice book to a useful resource that anyone can learn from and enjoy.
Also, as these edge rates become faster, using rules of thumb can place unpractical routing constraints on traces.
William Poole has been a long-time proponent of rules of thumb for monetary policy.
'Rules of Thumb' lists an electric counterbalanced truck with a 5,000-pound capacity at $25,000 to $30,000, including a battery and charger.
Not necessarily, according to an analysis of newspaper industry "rules of thumb" by the Inland Press Association.
Using tools such as life cycle analysis as well as some simple rules of thumb, designers can improve the environmental sustainability of an automobile.
Rules of thumb; 72 authors reveal their fiction writing fixations.
Business valuators looking for resources will find them here with articles including "Valuation Rules of Thumb" and "Choosing an Appraiser." Users can find links to information on BV methods, estimating a fair price and valuing a business for sale in the Elsewhere on the Web section.