The 80-20 rule is a business principle that 20% of your customers generate 80% of your profits. Learn what is the 80-20 rule and how to apply it in your business and life.
The 80/20 rule is one of those things that we hear about a lot but don't understand. It's often applied in business and marketing, but many other areas, including our personal lives, can be helpful.
The 80-20 rule refers to the imbalance or disproportions in life, where 20% of inputs account for 80% of outputs. In simple terms: it means that 20% of your effort will give you 80% of the results you want. There are many different ways to apply this theory to your life so let's look at them now!
The 80/20 rule originated in 1906 with Italian economist Vilfredo Pareto.
Vilfredo Pareto observed that 80% of the wealth in Italy was owned by 20% of its population. When he looked at other countries and different categories of data, he found similar results: 20% of causes were responsible for 80% of effects; 20% of customers paid 80% of revenue; and so on.
The 80/20 rule is an example of a power law—a phenomenon where a small number (20%) accounts for a high proportion (80%) of inputs or outcomes—which means it works well across many areas. You can apply this principle to anything; whether you want more money or less work done each week, there will always be an application for learning how to get the most bang for your buck!
Pareto observed that 80% of the wealth in Italy was owned by 20% of its population.
This is an example of a power law, where a small number of inputs (20%) account for a high proportion of outputs (80%).
Power laws are everywhere. They describe income distribution, how many people watch YouTube videos, and even how we communicate with others.
Pareto's law is an example of a power law.
Pareto's law is an example of a power law, where a small number of inputs (20%) account for a high proportion of outputs (80%). Power laws are one type of scale-free network—a set of nodes (people in this case) connected by some relationship. There are many different scale-free networks, but they all share one essential characteristic: their distribution follows a power law.
Power laws generally describe relationships between two variables that can be expressed as a power function. The relationship between the number of people who have an income between $50,000 and $100,000 and the population is usually defined as follows: x=y^2 or x=y^0.5, where y is the total population and x is either the proportion or number of people with an income between $50K and $100K respectively - both these equations give you about 20% when you plug in any value for y (the total population).
The 80/20 rule means that 80% of results come from 20% of the effort.
The 80-20 rule is a general principle that explains how the world works. It describes the imbalance between inputs and outputs, where 20% of the work results in 80% of the production. While this isn't always true, it's a good rule of thumb for deciding what to do with your time when you're trying to get something done efficiently. For example, if you have 100 tasks on your to-do list and only 8 hours per day to complete them all, then obviously you can't finish all 100 tasks in one day—but if you focus on finishing just 20% (16) before quitting time, then that would be considered doing well at work!
The 80/20 rule also applies to personal productivity: how long it takes us each day to get things done depends mainly on how much energy and focus we put into completing each task. Some tasks require more brain power than others, and some require little effort—if only we could figure out which ones fall into which category!
The 80/20 rule is a theory used to explain imbalances or disproportions in life.
The 80/20 rule states that 80% of your result comes from only 20% of your efforts. That means if you could find the 20% of things that bring you your results, you can focus on them rather than spreading yourself thin over all aspects.
The most common way we see this rule applied is as Pareto's Principle or the law of the vital few: roughly 80% of consequences stem from 20% of causes, with some variation depending on who you ask and what they're looking at. It's also been described as Zipf's Law, which states that few events account for most (80%) occurrences within a population.
In other words: there's always something happening in our lives that makes us feel busy; something we could do differently if we had more time or resources available but don't because it seems too complicated at first glance.
There are many ways to apply the 80/20 rule to your life.
Like most people, you probably spend a lot of time on things that don't produce the desired results. Maybe it's spending hours each week working on a project that isn't going anywhere or calling up old friends who never have time for you.
You can use the 80/20 rule to determine where your time and energy are wasted. Look at areas like your budget or health goals and find out what 20% of it will bring about the most desirable results. Then focus all your efforts on those tasks until they're accomplished—and move on to something else!
You can use the 80/20 rule to determine where you waste your time and energy.
The 80-20 rule can be applied to many aspects of your life. You can use the 80/20 rule to determine where you waste your time and energy.
For example, how much work do you think is involved if you want to lose weight and get fit? If you look at the most popular diets, they all have one thing: they tell you that losing weight depends on eating less and exercising more. But let's say this is true—that 20% of what we eat controls 80% of our bodies' health goals. That means if we could eliminate those unhealthy foods from our diet (and replace them with healthy ones), we would see significant improvements in our bodies! In other words, if we focus on eating healthy foods instead of worrying about how much exercise we need each week or what activities will help burn fat faster than others (like HIIT vs. LISS). Our bodies will naturally reach their ideal weight without any extra effort!
It can help you target your efforts.
If you want to get the most out of your life and achieve the things that matter most to you, it's essential to understand how to apply this principle.
The 80-20 rule says that 80% of your results come from 20% of your efforts. That means if you focus on improving the things bringing in 80% of what you want—like work, relationships, and other areas where there is significant room for improvement—you will see substantial results fast.
But before we dive into all that, let's talk about why focusing on one area at a time will help us use our energy wisely and maximize our success rate.
You can look at areas like your budget or health goals and find out what 20% will bring about the most desirable results.
In your life, you have areas where you're trying to make progress. You want to be healthier, more productive, save money, and pay off debt. And when you look at the big picture of these goals, it can be overwhelming.
But what if there's another way? What if instead of focusing on everything that needs improvement in your life, all at once (which would be impossible), you could focus on the 20% that matters most?
What if there was some way to do this so quickly that it works? Well, there is The 80-20 rule!
That's right—the 80-20 rule is exactly what we need here because it tells us exactly how much effort we need to put into specific areas for them to get better.
The 80-20 rule can help you figure out what's essential so you can put more effort into those areas.
The 80-20 rule, also known as the Pareto principle after its founder Vilfredo Pareto, is a mathematical law describing how most things are distributed. It states that 80% of your results come from 20% of your efforts. To get better results faster, you should focus on improving the 20% instead of trying to improve everything at once.
The 80-20 rule can help you figure out what's essential so you can put more effort into those areas and ignore the rest. It applies to almost everything in life—career goals, business strategy, and even fitness routines! For example:
If 100 people buy your product daily and only 5 leave reviews online while 95 don't say anything publicly about it (but still buy), which group should receive more attention?
Suppose ten different types of content were published this month by one website. Still, only two types generate clicks from users' search queries (and everyone else generates zero clicks); which type should they focus on producing more often?
Conclusion
The 80/20 rule is a simple way to apply the law of averages in your life. It lets you focus on what matters most and save time on other less essential things. The 80/20 rule can help you figure out what's important so you can put more effort into those areas.
References
Koch, R. (1999). The 80/20 Principle: The Secret of Achieving More with Less. Crown Business. https://www.penguinrandomhouse.com/books/228946/the-80-20-principle-by-richard-koch/
Vilfredo, P. (1896). The distribution of wealth: A theory of wages, interest and profits. Macmillan. https://www.marxists.org/reference/subject/economics/pareto/pareto-ch1.htm
Juran, J. M. (1951). Quality control handbook. McGraw-Hill. https://www.mheducation.com/highered/product/quality-control-handbook-juran/9780071622279.html
Pareto, V. (1964). The Mind and Society (F. E. Emery, Ed. & A. Livingston, Trans.). Dover Publications. https://www.amazon.com/Mind-Society-Treatise-General-Sociology/dp/048622973X
Ferriss, T. (2010). The 4-hour work week: Escape 9-5, live anywhere, and join the new rich. Random House. https://www.penguinrandomhouse.com/books/178596/the-4-hour-workweek-expanded-and-updated-by-timothy-ferriss/