The 80/20 Rule Will Rock Your World
by Brian Bagnall
About the 80/20 Rule:
- Everything is disproportional but people tend to act as though it’s equal
- The effective stuff is 16X as productive as the ineffective stuff
- 80/20 operates in LAYERS — there’s a top 20% of the top 20% (4%) and a top 20% of that (0.8%)
- 95% of your profit comes from 5% of your customers!
- 80/20 operates in multiple dimensions: Customer behavior in any given month, customer behavior over time, product sales, product profitability, product development cycles, vendors, referral sources
- Applies to problems too: Problem customers, problem employees, problem products
- “Good enough is good enough”
- Tells you what you work on next
- Defines an ascension process for customers
- 80/20 is THE #1 source of enormous leverage in everything you do — learn to recognize 80/20 principles in all situations and all spheres of life
- 80/20 tells you exactly which online leads to market to offline
- Not “How can I save money in my marketing?” but “Which customers do I invest a lot more money in?”
Tiered Pricing Strategy
Selling information and services: Enormous price / demand elasticity
80/20 Pricing Strategy for Info Product
- 80% buy “Basic” $24.95 (50% of revenue)
- 16% buy “Silver” $74.85 (30% of revenue)
- 4% buy “Gold” $199.95 (20% of revenue)
- One product vs. Upsells:
- +60% Revenue and +200% Profit
- You can afford to pay more than everyone else!
- One of the best ways to increase your visitor value
