Pareto’s Principle

In business, there’s something known as Pareto’s Principle. Pareto’s Principle says that 80 percent of a company’s profits come from 20 percent of its products. Pareto’s Law was developed in the late 1880’s by Italian economist Vilfredo Pareto. Originally, Pareto observed that 80 percent of the land in Italy was owned by 20 percent of the population. Later, he observed that 80 percent of the peas in his garden were produced by 20 percent of the peapods. Thus Pareto’s Law – a principle that extends beyond business sales and productivity – was born. In business, although you will always have less successful and more successful products, you can try to focus your efforts so that you don’t have 80 percent of your products only yielding 20 percent of your sales.