Pareto Principle

Pareto Principle

The Pareto principle, named after the economist Vilfredo Pareto, also known as the "80-20 rule", says that with 20% effort, 80% of the result can already be achieved. It follows that the remaining 20% requires the most effort, i.e. the missing 80%.

In a company it should be used where the greatest benefit can be achieved. Usually 80% of the turnover comes from 20% of the customers. Therefore, companies should identify these customers and cultivate the relationship in order to earn a lot with as little effort as possible.

The Pareto principle can be applied to products in the same way. The 20% of the top-selling products should be filtered out in order to achieve the 80% of total sales.