aprilhenry (aprilhenry) wrote,

20% & 80%

In health care, they say that 20% of patients are responsible for 80% of costs (like people with diabetes – that’s an expensive ailment to treat, it can’t be fixed, and it can cause a cascade of health problems). (Wikipedia reveals: “Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales comes from 20% of your clients.")

I guess it’s the same in publishing. 20% of a publisher’s books account for 80% of the profit.

You can find out more in a long essay in the Harvard Business Review. Part of it says Grand Central Publishing picks just two 'make' books, one fiction and one nonfiction, for which the publisher pulls out all the stops. Last fall, those books were David Baldacci's Stone Cold and Stephen Colbert's I Am America (and So Can You!). In 2006, “Grand Central’s most heavily marketed title incurred costs of $7 million and achieved net sales of just under $12 million, for a gross profit of nearly $5 million—50 times the average."

The company counts on blockbusters to make up for books that don’t even cover their costs (similar to diabetic patients).

Read more here.

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Tags: harvard business review, pareto principle

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