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Pareto Principle

Also known as the 80/20 principle, the observation that roughly 80% of the effects come from 20% of the causes.

For products this means that 20% of your effort causes 80% of your sales; 20% of your customers cause 80% of your complaints; 20% of your marketing activities lead to 80% of your traffic.

Spending a little time working out what that 20% is can save you a lot of work and increase your success tremendously.

The figures 80 and 20 are somewhat arbitrary: it may be 90/10, or even 99/1. The point is that a "power law" is at play in many of the aspects of building a business.

← PAD Passive income → ↑ Glossary


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