Pareto was an economist who found that 80% of the land in Italy was owned by the 20% of the population. Years later, people started finding this trend in other areas, and someone decided to call this phenomenon the Pareto Principle .
A simple example:
20% of the customers of a company generate 80% of the support requests.
If this is really the case, you may wonder whether that 20% generates enough revenue to compensate for the support infrastructure you need to maintain. If they don't, then you may better cut them lose and keep the remaining customers.
Remember that in most cases this principle has no mathematical validation, it is really a phenomenological condensation of complex topics. For instance, 20% of the code has 80% of the bugs, or 20% of the code will take 80% of the development time
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