A number of years ago, I had a client who told me of a great habit he’d developed: once yearly, during his birthday month, he would review what were usually considered fixed expenses. These were typically subscription based, recurring monthly at the same rate and often without any thought or examination on his part. Things like:
- medical or property insurance
- telephone or cable rates
- journal subscriptions
- property maintenance
- inventory or storage locations
- networking affiliations
- credit card rates
- employee functions (surprised to see this one here? Keep reading)
You get it – all those monthly fees that are often so low you barely notice them but which add up to considerable investments that might not be paying off as they should for you. So often, we assume that the thought process that led to a prior decision is still viable and represents a benefit. Yet, the circumstances and opportunities that led to that choice may no longer be relevant and need to be re-examined.
So, how do you evaluate which to keep, replace or completely ditch?
- Past usage? Has your use of the service been an important part of your business, one that’s incorporated into the well-run flow of operations?
- Can you quantify the cost’s past value with time, money or percentages changed as a result? This is a favorite technique of mine yet often overlooked: how have things improved, in a measurable way, as compared to the continued cost?
- Can you renegotiate terms as a long-term member or subscriber? It couldn’t hurt to ask, right?
- Can you use competitive offers to improve your standing with the provider? Try this one when you call to renegotiate!
- Can you reduce your costs by bundling with other useful services the provider offers? They certainly would like you to buy more services and if they are useful to you, will likely reduce your per-service cost.
- Do your plans for the next year call for an improved level of service? As you review your plans and goals for the next year, consider how the current service or utility continues to fit.
- Has your in-house technology or other systems changed rendering the current ones obsolete? It may be time to trade up and discover natural cost reductions as a result.
- Can you share your expenses with others? One of my favorite techniques that I learned decades ago: often your single membership or subscription cost will go way down when you bring others to the party. AT&T made this popular 30 years ago with their ‘Friends and Family’ offer – you do their marketing for them and your reward is a lower, group rate.
- Do you have a membership in a trade or other organization that offers any of these expenses covered as a perk of membership? Read the fine print; you may discover that your gym, co-op, industrial park has included utility or cable access. See? They read #8!
- Can you replace the cost of a team member with an outside provider (or vice versa)? With ‘hybrid employment’ the new norm, consider outsourcing, using part-time, a professional partner, contractor or shared employee to reduce costs.
And just think – over time, any of these savings may pay for the year-end party!