A concept · How Advantage Compounds · Economics

Price's Law

Half the output comes from the square root of the people.

A team of ten runs on two people. Everyone can name them. The company grows to a hundred, the work still seems to come from a handful, and the handful looks about the same size. We add people and the load does not spread the way the headcount says it should. Is that a management failure, or is something else going on?

What Price's Law means

Price's Law is the observation that in any group producing something, half of the output comes from roughly the square root of the number of people. A team of 10: about 3 people do half the work. A department of 100: about 10. A field of 10,000: about 100. The definition takes a sentence and a calculator. Owning it changes how we read a room. We stop expecting a new hire to add a tenth to a team of ten, and start asking who the three are and what would happen if one of them left. We stop reading a big organisation as a hundred equal hands and start seeing the ten. And we stop treating "the few do most of the work" as a complaint about the many, because the shape appears even where nobody is judging anyone.

Not to be confused with

Price's Law is not the Pareto principle. Pareto says roughly 80 per cent of results come from 20 per cent of causes, a fixed share. Price's Law says the share shrinks as the group grows: the square root of 10 is a third of the team, the square root of 10,000 is one per cent.

Price's Law examples: where it shows up

  • At work: doubling the team does not double the output; it doubles the number of people watching the same few.
  • With money: on any platform or marketplace, a sliver of sellers or creators makes the work that draws everyone else, and the platform's value sits with them.
  • In our own careers: being uncommon on several useful things is more reachable than being extreme on one, and it is how the few get to be few.

Where it sits

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