The 80/20 Rule Will Rock Your World

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