You’ve probably heard the term “diminishing returns” before, whether it was applied correctly or otherwise. Diminishing returns refer to a point at which the level of profits or benefits gained is less than the amount of money or energy invested. In other words, the point at which +1 of a resource (time, money, or effort) results in less than +1 improvement in the outcome.

We can experience diminishing returns in so many areas of our lives that recognizing when we’re at that point can be difficult. This is especially frustrating when we fail and continue to fail because we do the same or similar actions expecting different results instead of adjusting.

Realizing when we’re at or approaching the point of diminishing returns is essential because it saves us from wasting valuable time, energy, effort, and money. Becoming adept at understanding this principle can make you millions.

One Achiever, Sarah, a real estate agent, uses this to her advantage all the time. For months, she would show houses to potential buyers and sellers regardless of how many showings they requested. After a while, she realized that the prospects who most often turned into sales met with her two or three times, and prospects who met her more than that rarely resulted in a deal. Thus, Sarah found her point of diminishing returns. She then would only meet with clients two or three times and, in a few weeks, had tripled her sales because she no longer wasted time on the 4+ meetings.

Apply this to your own life, with prospecting clients, teams, peer meetings, or even exercise. You’ll find the optimal point when spending your valuable time.

“2015-01-05 A reflection on diminishing returns versus compounding growth — index card” by sachac is licensed under CC BY 2.0