What is Pareto Principle?
Transcribe of “How To 5X Your eBay Amazon Business Using The 80/20 Pareto Principle”
Hi, this is Nel Waterhouse. Most of you all have heard about the 80/20 rule, which of course it is known as the Pareto Principle, however, many people don’t realize you can use this universal rule in almost any aspect of your life to improve your results by a factor of five.
You can use the 80/20 rule when building businesses, improving your health, creating joy and happiness in your life, improving relationships, building wealth, no matter what task or goal it is, the 80/20 rule can be used to 5x the results.
The 80/20 rule is not always 80/20
Of course, the 80/20 rule is not always 80/20. Sometimes it can be 90/10, or 84/16, but the concept is always the same. And, by the way, the concept originally came from the economist Vilfredo Pareto, when he observed back in, don’t quote me, I think it’s 1895, 1890, I’m pretty certain it was 1895, but 80% of Italy’s land belonged to only 20% of the population.
He later discovered that virtually all economic activity was subject to this Pareto Principle. It was later though discovered that the 80/20 rule comes into play with many other things, including nature. For instance, 20% of the bean pods produce the majority of peas.
The rule also says that 20% of your activities will account for 80% of your results. Traditional business, 20% of your customers will account for 80% of your sales.
With an online business, 20% of the products sold on any marketplace like eBay or Amazon account for 80% of the revenue
With an online business, 20% of the products sold on any marketplace like eBay or Amazon account for 80% of the revenue, we’ve seen this over and over again. The same goes for building an online business. This means that if you’ve got a list of 10 items to do, two of those items will turn out to be worth as much or more than the other eight items put together.
Pareto Principle is the observation that most things in life are not distributed evenly
The bottom line is the Pareto Principle is the observation that most things in life are not distributed evenly. 20% of the input creates 80% of the result. Some examples are, with online eBay or Amazon business, 20% of the products create 80% of your revenue.
With optimization, 20% of the optimization techniques gives 80% of the results. With staff, 20% of the workers produce 80% of the result. In other words, to speed up success with anything, always focus on the aspects that give the 80% return.
Always focus on the aspects that give the 80% return.
Always remember, the 80/20 rule acknowledges the imbalance in the effort in results, and allows us to use that imbalance to our advantage. The best part is that, let’s just say you’ve got 10 tasks to do, one or two of those tasks will contribute five or 10 times the value of any, of all the other tasks on your list. Often, one item on a list of 10 things to do can be worth more than all the other items put together.
That task is invariably the one that you should do first.
Most valuable tasks are often the hardest and most complex
But the most valuable tasks are often the hardest and most complex, but the payoff rewards for completing those tasks can be massive. And it’s, for this reason, you must adamantly refuse to work on tasks in the bottom 80% when you still have tasks to do in the top 20%. Before I begin any task, I always ask myself, is this task in the top 20% of my activities, or is it in the bottom 80%?
That’s all for this week, please scroll down and leave me a comment below, until next week, list more, sell more, this is Neil Waterhouse.
Please leave a comment below and let me know what you think.
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an oldie but a goodie!