Pareto principle
What it is for
Use it when everything gets treated as if it counted the same. It rarely does: a minority of clients, products or causes produces most of the result, and until you see it drawn you keep spreading attention evenly. The curve shows where the cut falls in your case, which need not be at 80 and 20.
Your items
3 items out of 6 make 89% of the total.
What you type stays in this browser and is never sent anywhere.
The number that matters is not 80 and 20, it is where the curve bends. Past that point each item adds little: that is where to stop spending attention, not necessarily what to cut.
Frequently asked questions
How to use this model
Is the ratio always 80 to 20?
No, and treating it as a rule is the most common way to misuse it. Pareto observed that in Italy eighty per cent of the land belonged to twenty per cent of the people, and that proportion turns up often, but it is not a law: in your data it may be 70 to 30 or 95 to 5. The drawing is there to show which.
Does it mean I should drop the tail?
Hardly ever. It says where to stop spending extra attention, not what to remove. A small client may cost little to keep, or be the one who brings you the others. The right question is not who to cut, it is where you are putting equal effort into things that return ten times less.
What can it be used on besides clients?
On anything countable: causes of faults, stock items, reasons people contact support, pages that bring traffic. It works wherever numbers are skewed, which is the normal case outside statistics textbooks.
What is the Pareto principle?
It is the observation that in many distributions a minority of causes produces the majority of effects: about eighty per cent of the result comes from about twenty per cent of the entries. It is named after Vilfredo Pareto.
Are eighty and twenty exact numbers?
No, they are a label. The real proportion changes case by case and may be 70 and 30 or 90 and 5; the two numbers need not even add to a hundred, because they measure different things, causes on one side and effects on the other.
What can I apply it to?
To any list where each entry carries a value: customers and turnover, defects and complaints, pages and visits. The chart sorts the entries from the heaviest and draws the curve of how much has piled up.