Pareto Principle and The 80/20 Rule for Authors

Please Note: Credit for Pareto Principle goes to Italian researcher Pareto (after whom it is named)

Please Note: Credit for 80/20 Principle goes to Mr. Koch who wrote the book on it. His book is inspired by the Pareto Principle

What is the Pareto Principle?

The Pareto Principle says that in any system there is an imbalance

1. The vast majority of ‘good results’ flow from a small percentage of the actual effort put in
2. The vast amount of land in a country is owned by a small percentage of people
3. The vast amount of money in the world is owned by a small percentage of people
4. The vast amount of profits in a market are captured by 1 or 2 companies. Apple and Samsung in phones are a good example. Together they used to capture over 100% of the market profits in Mobile Phones (everyone else lost money)
5. The vast majority of book sales, are captured by a small percentage of authors

Pareto Principle is very interesting because it applies to almost everything

For Authors and Publishers it is critical because it dictates that

1. Vast amount of your sales, will flow from 1 or 2 or 3 of your books
2. Vast amount of good results, will flow from a small percentage of your marketing
3. Most of your book reviews, will come from a small set of readers

And so forth

What is the 80/20 Rule? 

The 80/20 Rule says that

1. 80% of the Results flow from 20% of the Efforts

Basically, it is saying that in any system, there is an 80-20 distribution where 80% of the ‘results’ can be attributed to 20% of the ‘contributing factors’

Richard Koch distilled the Pareto Principle into the 80 20 Rule i.e.

1. 80% of the Successes you get, are from 20% of the Things You Do
   1. Implicit in it is that the remaining 80% of the Things You Do are Inefficient as they only lead to 20% of the Successes/Results

There are also some variations

1. The 60-30-10 rule i.e. 10% of Efforts lead to 60% of the results, 30% of efforts lead to 30% of results, and remaining 60% of the efforts lead to only 10% of results
   1. Imagine if you could find the 10% of your work that is leading to 60% of your rewards
   2. If you could find that and focus solely on that, you could grow results to 600% of their current level
2. The 90-10 rule i.e. 90% of Results flow from 10% of Efforts
   1. This is a more extreme version of 80-20 rule

The underlying principle is the same

1. A relatively small percentage of all the work and effort you do
2. Is Responsible for the vast majority of good results you get

And the follow on is

1. If you can figure out what this ‘Golden Effort’ is, which is responsible for most of the Results
2. You can focus all your energy and effort on this ‘Golden Effort’, and greatly increase your Results

Hopefully this gives you a clear idea of what these Principles are

Why Pareto Principle and The 80/20 Rule are Critical for Authors

Firstly, Pareto Principle and The 80/20 Rule help Authors focus on what is truly important

1. If the vast majority of sales are going to flow from only 20% of the marketing you do, it becomes imperative to figure out what this 20% is
   1. So that you can focus more and more of your marketing budget on this ‘Super Marketing’ which works very well
2. If the vast majority of your book sales are going to be generated by 1 or 2 books, then you should figure out which
   1. So you can write more and more books of that type, and sell more and more
3. If the majority of reviews are going to come from 20% of your readers, you should gather their emails
   1. So you can treat them like the superstars they are
4. If 80% of your book sales are going to come from 20% of your readers, then you should gather their emails
   1. So you can inform them when you have new books
5.  If 80% of your book sales are going to come from 20% of book stores, you should identify these
   1. So that you can focus on this small set of book stores which is generating all of the sales

You absolutely need to know what is working, so you can double down on that

Secondly, Pareto Principle and The 80/20 Rule help Authors understand the brutal and beautiful nature of book sales and book stores and the books ecosystem

1. The top 20% of books generate 80% of the book sales
   1. You have to write books that are among the best. Everything outside the top 20% basically loses money
2. The Books in the Bestseller Lists generate the vast majority of book sales, and capture the vast majority of book sales
   1. You have to aim for the Bestseller Lists
3. The Top 10% of Authors capture 90% of book revenues, and 100% of the profits
   1. If you’re not in the Top 10% you are losing money
4. Once you get into the Top 10% of Authors or the Top 20% of Books, you have more and more money and resources and brand
   1. It is not just that you start capturing 80% of the money, you also set yourself up to Keep Capturing more and more money
5. Everyone outside the Top 10% really has a hard time
   1. Without money you cannot do marketing. Without marketing you cannot get sales. Without sales you cannot get money
   2. Your focus should be on getting into the Top 10% of Authors
   3. The price of missing out on the Top 10% of Authors and the Top 20% of Books is very high

We apologize if this seems scary and stressful. This is exactly what Pareto Principle and the 80/20 Rule teach you – that the 80/20 distribution is everywhere. It can be your best friend. It can be your worst enemy. You get to decide which