Base rate
How often something happens across all comparable cases — the number your own optimism is measured against.
A base rate is how often an outcome occurs across every comparable case, before anything specific about yours is considered. What share of consultancies reach $500,000. How many cold emails to a stranger get a reply. How long a project of this size usually takes across everyone who has run one.
It matters because a plan built only from the inside is a story, and stories are constructed from the steps you can picture. You can picture the work, so the estimate reflects the work; you cannot picture the illness, the late supplier or the client who goes quiet for three weeks, so none of those are in the number. The base rate contains all of them, because it is drawn from cases that had their own versions.
Using it does not mean surrendering to the average. It means starting there and adjusting for specific, evidenced differences — you have done this eleven times, or you have an introduction nobody else has. What it rules out is adjusting on the grounds that you will simply try harder, which is the adjustment everyone makes.
Worked: you estimate a build at six weeks. Your last four projects of this size took nine, ten, eight and fourteen. The base rate is about ten. Quoting six is not confidence, it is a 60% chance of an apology and an unpaid overrun.
Also known as
- prior
- outside view
Relevant for
- Founders
- Start from what happened the last four times, then adjust for a difference you can name — "we will try harder" is not a difference.
- Business owners
- Your own past projects are the best base rate available and the one nobody looks up; the estimate you can picture never includes the three weeks a client goes quiet.