What Is Cost Saving? (With Tips to Reduce Workplace Costs)

By Indeed Editorial Team

Published September 21, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

One way that companies can maximize their profits is by minimizing their expenses. There are many ways to do this, such as automating processes or reducing waste. Learning more about the methods you can use to reduce costs can help you choose one that suits your business plan and goals. In this article, we explain what cost saving is and discuss 18 different ways you can minimize costs at work.

What is cost saving?

Cost saving includes any action a business takes to reduce its operating costs. Companies may implement short-term strategies to lower business costs to compensate for market changes or long-term strategies to increase profits and maintain a steady budget. Executives may be responsible for determining ways to cut costs, but employees and managers can contribute their ideas as well to help companies meet their business goals.

Related: Comparing Cost Saving vs. Cost Avoidance (Key Differences)

How to minimize costs at work

If you want to minimize costs at work, here are some ways you can do so:

1. Reduce extraneous spending

Start by assessing the company's current spending and expenses before determining ways you can cut costs. Identify extraneous spending that you can cut without it having an impact on the company. For instance, if you order premium paper for internal communication, you can switch to a cheaper paper instead.

Related: Capital Resource Examples (With Tips on Saving Money)

2. Examine the personnel

Examine the company's current personnel and determine whether there are roles you can combine or eliminate. For instance, if you know someone is retiring soon, assess their position and determine whether you really need a replacement. Eliminating the role or even hiring someone to fill it at a lower salary can help you cut costs. If the company's budget can't sustain all its employees, you may lay off certain people. It's important to consider that there are costs associated with laying people off, though, such as the cost of a severance package.

3. Reorganize departments

When examining personnel, you can also look at reorganizing the company's departments. Examine each department's output to determine if there's an overlap between their services. If there's an overlap, you can cut costs by combining the departments. For instance, if there are two separate departments for marketing and public relations, you may combine them and lay off employees that have similar responsibilities.

Related: Understanding Company Reorganization for a Smooth Transition

4. Travel efficiently

If the company has designated vehicles for work, evaluate your fleet efficiencies for any adjustments you can make. For instance, if you need delivery vehicles, look for the most fuel-efficient ones to save money on gas. If employees travel for work to meet international partners abroad, for example, try finding less expensive flight tickets or negotiating a corporate discount for hotels. Allowing employees to work from home, either for every shift or a certain number of shifts a week, can also help them save money on travel costs.

Related: Exploring the Pros and Cons of Going on a Business Trip

5. Restructure services

If the company you work for offers services, consider restructuring them to cut costs. For instance, if the company offers 24/7 phone customer service but most people call during business hours, you may eliminate the night shift. You can hire a consultant to assess your current offerings and suggest areas for improvement or ways to save money.

6. Outsource work

Instead of hiring part-time or full-time employees, you can consider outsourcing specific tasks for a lower price. Consider hiring freelancers or contractors that can complete specific tasks or projects. For instance, if you want to rebrand the company, you may hire a graphic designer to create a new logo. Outsourcing work can help you save money on wages and benefits or severance packages.

Related: What Are Expense Accounts? (With Different Types and FAQs)

7. Talk to your team

If you lead a team, consider holding a brainstorming meeting with them to discuss potential ways to minimize costs. They may have suggestions you didn't consider before. Including them in the discussion can also help them feel respected, encouraging them to participate in the changes you plan to implement to lower operating costs.

8. Use technology

While the initial cost of purchasing technology, such as new software or computers, can be expensive, it may help you save money long term. Try finding software that helps you automate tasks so employees can focus on more challenging work. For example, instead of hiring an employee who counts inventory by hand, you may purchase inventory management software that tracks your supplies for you.

Related: What Is Workplace Automation? (With Benefits and Examples)

9. Negotiate vendor contracts

If you work with vendors or suppliers, try negotiating better deals with them. Vendors and suppliers may be more likely to agree to a discount if you have a longstanding relationship with them. If they can't lower their prices, you may find a new supplier or vendor that can offer you a lower price.

10. Maximize tax benefits

Consider hiring an accountant to discuss the tax benefits you may apply to save money. Each province and territory has different tax regulations, so it's important to talk to someone who's familiar with your location. An accountant can also help you determine what expenditures you can write off at the end of the tax year, helping you save more money.

Related: What Is GST and Who Can Collect It? (With Answers to FAQs)

11. Lower overhead costs

Businesses with a physical storefront, office, or workspace typically pay overhead costs, such as rent, mortgage payments, or utilities. Try to minimize these costs, such as using energy-efficient lighting to lower your electrical bill or installing solar panels. While the initial price to lower overhead costs may be expensive, you can enjoy the saving benefits for a long time.

Related: How to Calculate and Use the Applied Overhead Formula

12. Assess competitors

Assess the company's competitors to determine how much they're spending and how they're reducing costs. This can help you gain ideas you can apply to your own cost reduction methods. For instance, a competitor may be focusing on social media marketing rather than traditional media marketing, saving them money and helping them appeal more to your target audience.

13. Maximize productivity

If employees aren't as productive as possible, they may not complete as much work. Try to maximize productivity by learning more about team members' unique skill sets so you can assign work according to their strengths. This can help motivate your team to work and increase their effort to reach their goals.

Related: 14 Best Productivity Tools to Boost Workplace Productivity

14. Reduce waste

Reducing the amount of waste that the company outputs can help the environment and reduce operational costs. Consider the waste output from each department to find ways you can minimize it. For instance, you may notice the communications department is using double the amount of paper as any other department, so you may suggest switching to digital notes and correspondences.

15. Reduce inventory

If the company has inventory that's not selling, you may consider reducing it to minimize waste and focus on better-selling products. You can try selling the leftover inventory at a discount to attract more customers. Reducing existing inventory can also help you minimize storage costs.

16. Evaluate employee perks

Many companies offer perks to employees, such as discounts or corporate memberships. Assess these perks to determine whether they're providing value to employees. If most employees aren't using the perks, consider discontinuing them and putting the money toward employee wellness programs your team is actually interested in using.

Related: 15 of the Best Work Perks and Discounts for Employees

17. Use alternative marketing

Traditional marketing, such as television or radio advertisements, can be more expensive than new marketing techniques like search engine optimization (SEO). Talk to your marketing department to brainstorm ways you can reduce advertising costs. For instance, instead of paying for television space, you may focus on increasing brand awareness on social media.

18. Switch to remote work

As companies often spend on overhead costs, switching to remote work may help you eliminate this spending. Instead of commuting to work, employees can work from home, saving everyone time and money. You can use video or audio software to communicate with your team and still collaborate effectively.

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