The Survey programs of the College of American Pathologists (CAP) have assessed current levels of analytic variance in many biochemical measurements, and a number of clinical chemists have proposed analytic goals. The practical importance of further reductions in analytic variance depends on the specific use of the laboratory test. Three general areas of application are described: 1) surveying a population to detect disease, 2) determining whether a particular individual's level of a given analyte is above or below a predefined alarm point, 3) monitoring an individual over a period of time to detect trends. Within each of these different contests, statistical methods are proposed for judging the practical effect of improvements in current levels of analytic precision, taking into account recent estimates of biological variation within the average individual and between individuals. As might be expected, reductions in analytic variance have greatest impact in those applications where biological variance is minimal. Such reductions will generally have little effect on the efficiency of a population survey but may be extremely valuable in decision-making concerning a particular hospital patient.