The 80/20 Rule

Published 18 August 04 by Justin French, 2 comments

For the past three years I’ve offered web hosting to my clients. I bought some space on a reseller web host in the US, and started offering it to my clients as an extension of my web design services.

Here’s the thing – I’m a designer, web application developer and information architect. Every minute of the day that I spend chasing down a hosting client for a late payment or resetting their password again is time away from what I really do.

I have to enter a truckload more invoices, spend a lot more time answering the phone and emails, and constantly act as a middle man between the upstream host and the client.

None of this anywhere near as rewarding, challenging or profitable as the time I spend working with my real clients.

It’s a pretty good example of the 80/20 Rule (also known as the Pareto principle). Whilst the ratio of 80:20 isn’t exactly spot-on, it’s easy to apply it to my situation:

• a small number of my clients contribute to the bulk of my income, and provide me with interesting, challenging work
• a large chunk of my day is spent dealing with problems and tasks which only relate to a small portion of my income

It’s pretty clear to me what needs to be done – phase out most of my hosting business, and spend that time and energy on more interesting, challenging and profitable work.

When I started freelancing in 1997, I took on every bit of work I could find, no matter how shitty, small, repetitive or pathetic it was. There’s no doubt that I needed that work back then, but things changed rapidly – unfortunately I forgot to change my approach, and to this day I still say “yes”, when I probably should say “no”.

Starting tonight, things will change. I’ve already started to phase out a large portion of my hosting clients, and there’s a whole bunch of half-finished quotes on my desk which I doubt are really worth my time.

Getting back to Pareto, I can think of many applications of his rule in this industry… here’s two for starters:

1. A small number of the pages on a given site will probably account for a large amount of the site’s traffic – spend extra time on these pages making sure that the information is spot-on, the interface is as simple as possible, and the mark-up isn’t bloated.
2. 20% of the products in any online store probably account for 80% of the total sales or profit – make sure these products are easy to find, easy to buy, always in stock, competitive on price, etc.

It’s certainly worth thinking about, and Google has plenty more articles on the topic.