When it comes to running your online business, your profit margins mean everything to you. The health of your profit margins dictates where you can direct the future of your business, thus maximizing your earning potential should be one of your top priorities. Every little bit helps, so in this article we’re sharing our own personal business cost reduction tips that have made a difference for us in the hopes that they’ll make a difference for your business, too.
In business, there are 3 main ways you can maximize your earning potential:
- Get more customers
- Compel your previous customers to make more purchases from you
- Reduce your operating/overhead costs
In this article, we’ll be focusing on the last point: How you can reduce your operating costs so you can earn more from your current margins and make your business more lean overall. Operating a lean business that runs on a core set of essential apps, tools, and services ensures that you’re being as efficient as you can be and prioritizing your business’ cash flow over superfluous resources you don’t really need.
By operating our own business by these 9 tactics, we’ve been able to use some of the best apps, tools, and services in the ecommerce industry without having to actually pay the true costs associated with them. If you’ve poked around on our blog before, you can likely tell that we’re crazy about all things apps and we love a good resource that helps us do our job better. In fact, every app, tool, and service that we feature on our blog has been personally used, tried and tested by us which you can image, would be a costly endeavor. Great apps and services aren’t cheap, and we recognize that no matter how worth it they might be, the average entrepreneur just can’t fork over the cash to pay for all the apps and services they want to use for their store, no matter what they may be.
So if you’ve read our articles like 10 Essential Productivity Apps for Entrepreneurs, How to Cheat at Ecommerce: 50+ Powerful Tools, Apps & Resources for Your Online Business, 20 Smartphone Apps to Manage Your Online Business on the Go or The Ultimate Ecommerce Business Toolbox and wonder how on earth we use all these apps while still maintaining a thriving profit margin earning potential, then read on to learn all our secrets.
9 Business Cost Reduction Tips
Business Cost Reduction Tip #1: Invest Early in Apps/Tools
Our first business cost reduction tip is to constantly be on the lookout for apps, tools, and services you can invest into early on in their lifetime. When startups are new, their founders are likely keen for funding from a small number of eager customers who don’t mind using a tool that’s still under construction in order to get a useful service for a lower price than other, more established, tools in the marketplace.
By investing in services early on, you’ll likely be getting access to that tool for the lowest price it’s ever going to be listed on the market for in its lifetime, and although there may be some bugs in the beginning stages, you get the opportunity to provide the founders with feedback on how to make the tool better for the general public, which ultimately helps create a better tool for you, too.
The biggest advantage, however, when you invest in apps, tools, and services early on is that you’ll likely be grandfathered into their pricing plans as they grow over time, meaning that you’ll still be paying the low price originally listed when the startup was first available on the market, while new customers will be paying a more premium price once the product is more premium, too.
For example, when we first invested in the Mangools tools, they were relatively new to the market but we could see the potential in what they were creating for the industry. Fast forward to today and we’re paying about 90% less than what new users are paying for the same plan now! This means we get to use their awesome tools which we supported from the early stages and we’ve been able to keep our costs low while doing it. This way, it’s a win-win situation for everyone!
We highly suggest, however, that you’re very selective about the startups you invest in early on in their lifetime. Do your research on the company, the founders, and their vision for the future and take the time to evaluate the tool to ensure that it’s something you’ll actually use and don’t already have available somewhere in your toolkit. You might not get it right every time, but try not to invest in apps, tools, and services that you won’t truly have a use for in the long-term.
Business Cost Reduction Tip #2: Always Ask for More
This is perhaps one of the simplest business cost reduction tips we can offer, however, we find that it’s often under-utilized by entrepreneurs because so many people don’t even consider it as an option. The advice here is simple: Ask for free or discounted access to apps, tools, or services that you want to use.
Sometimes, it won’t work. You might email the company to ask for free or discounted access to their service and they’ll simply say no. That’s fine — at least you asked. But sometimes, and probably more often than you’d actually expect, they’ll say yes.
Entrepreneurs appreciate other entrepreneur’s hustle so if you’re asking for free or discounted access to another entrepreneur’s tool because you simply can’t afford it right now, or it would take too big of a chunk out of your budgeted operating costs then let that company know! Entrepreneurs recognize hustle when they see it, and they’re typically more than likely to help a fellow entrepreneur out even if it means they’ll earn a little bit less on their product in the meantime. It’s generosity like that which keeps our industry thriving and keeps entrepreneurs in business.
So, if there’s an app, tool or resource that you desperately want to use for your business but can’t justify the cost right now then ask for a discount, ask for an upgraded plan, ask for more credits, ask for an increased limit — just ask for more. Because if you don’t ask, you definitely won’t get it so you might as well just ask.
One tool almost every business uses that can be particularly advantageous to negotiate on is your cell phone bill. Almost every ecommerce business owner uses their cell phone day-to-day not only for personal communication but for business as well, but some cell phone plans can take a large chunk out of your operating budget. Most cell phone providers will lower your monthly or yearly rates if you ask, so it might be worth reaching out to yours to see what they can do.
If there’s also an app, service or tool you’re interested in using but don’t think it’s worth the price, ask the company for free or discounted access as well and let them know that you’re asking for it because you’re not entirely convinced the current price point is worth it. Don’t be harsh, but be honest that you’re just not sure and let them know why. If you’re constructive, they’ll generally appreciate your feedback and they either may be able to help you use their tool to its fullest potential or you might be able to trial the tool until you decide for sure whether it’s a good fit for you or not. Again, you simply just have to ask.
Business Cost Reduction Tip #3: Capitalize Lifetime Deals
Lifetime deals are a business owner’s best friend and if you aren’t already making use of them you’re missing a trick. If you haven’t already heard of lifetime deals and aren’t sure what they are, essentially, it’s a process where businesses offer their app, tool or service to consumers for an extremely discounted one-time purchase, referred to as a “lifetime” deal because the purchaser of the deal gets access to the tool for life. This is important because most of these apps, tools, and services would typically be offered on the market via monthly or yearly subscription fees, which quickly adds up and can become a costly part of a business’ operating costs.
To find lifetime deals related to the ecommerce industry, check out AppSumo and StackSocial. They’re the leading marketplaces currently curating worthwhile lifetime deals for entrepreneurs, and we’ve been able to score some pretty great tools from their sites that have helped us reduce our overall operating costs.
The main advantage of lifetime deals stems from the fact that you’ll never have to pay a recurring monthly or yearly fee in order to access the tool, which is a major business cost reduction achievement especially for tools that are essential to operating your business. For most businesses, this could mean tools used for inventory management, customer service communication, SEO optimization, and social media management, all of which are types of tools that you’ll find on AppSumo and StackSocial throughout the year. AppSumo, for example, roles out about 3 deals per week, many of which are lifetime deals.
Again, we caution entrepreneurs to ensure that any lifetime deals you plan on purchasing you consider thoughtfully before you do. There’s no use investing in a lifetime deal if it’s not actually going to be valuable for your business, so keep that in mind. AppSumo, however, does offer a 60-day refund window so if it does turn out that any lifetime deals you purchase don’t actually work out for your business, then you can return them for a refund. We appreciate this option as it ensures entrepreneurs can fully try out the tools and integrate them into their business practices first without having to completely to commit to them if they don’t work out for whatever reason.
Business Cost Reduction Tip #4: Wait for Black Friday
This business cost reduction tip is one of our particular favorites and one that we consistently exercise year after year. Since Black Friday is a major consumer shopping holiday, there are plenty of digital apps, tools, and resources that offer their services at a discounted rate around this time of year, meaning they can be scooped up at a steal-of-a-deal price year after year.
We highly recommend that you sign up to any services you need or want to use for your online business around the Black Friday/Cyber Monday weekend because it’s likely that whatever tool you’re coveting will be offered at some kind of discount. If you purchase yearly subscriptions at this time as well, they’ll auto-renew around the next year’s Black Friday/Cyber Monday weekend too, which means you’ll be on a cycle of renewing the service every year at that same time where it’s likely going to be offered at its most discounted rate.
This is a hugely advantageous position to be put in and one that can save you some serious cash in the long run. Plus, it’s one of the few times per year when you know the app, tool or resource will be offered at a discount so there are no guessing games to play. If you’re looking for great tools to invest in this Black Friday/Cyber Monday, be sure to check out our annual roundup of the Best Black Friday & Cyber Monday Deals for Ecommerce Merchants when the time comes. We love curating the best tools that are holding great deals every year, and we certainly will be doing the same this year, too.
Business Cost Reduction Tip #5: Pay Yearly
We briefly mentioned this business cost reduction tip in the previous section, however, it’s important to reiterate every time you think about purchasing an app, tool or resource for your online business. Often, the tools are offered at a discounted price point if you pay for an entire year of access to the tool up front, as opposed to paying for the tool monthly, which can drastically reduce your operating costs overall.
It may be a hefty fee to pay up front rather than in smaller, more bite-sized chunks every month, but it’s important to look at the larger picture rather than the immediate short-term gain. By paying yearly for any apps, tools, and services you use regularly for your business you’ll likely be reducing your business’ operating costs by a fair amount which can quickly add up.
Business Cost Reduction Tip #6: Join Affiliate Programs for Your Favourite Apps
Many apps, tools, and services now offer affiliate programs which, if you’re not familiar with the term, enable you to earn a commision from every referral you direct to the service who signs up. Many affiliate programs are available for the average person to sign up to, so check out your favorite apps, tools, and services to see if they offer anything of the sort.
Some affiliates award referrals by paying out a commission of the sale, but other affiliate programs offer the referral a credit to their own account on the service, which can enable the tool to be provided to them at a free or discounted rate depending on how many users they refer to the tool.
This can be a completely worthwhile tactic to try out if you have some way of referring others to the tools you use, such as through social media, forums, online groups or peers in your industry, so take into consideration how you might be able to promote affiliate referrals within your industry to make this tactic worthwhile for you. Since this tactic could result in completely free or discounted use of a tool you already use and love, it might be worth the added effort of promoting it.
Business Cost Reduction Tip #7: Consolidate Apps/Tools
It’s common to get caught up in the excitement of new apps and emerging tools on the market to the point of actually investing in too many of them. With each new app release on the market or new tool that you discover, remind yourself a few months after purchasing it to reflect on whether it’s actually become a key player in your ecommerce toolkit, or if it’s something you can live without.
As a business owner, what you don’t want is to be paying for two apps when one can do the job, so review all the tools and services you pay for to find areas where that might exist. There’s likely to be apps you aren’t using to their full potential or tools where there have been new features and functionalities added, so remember to review your toolkit every so often to find the apps you can axe from your roster. This will save you both money and unnecessary clutter for services you don’t even need anyways.
Business Cost Reduction Tip #8: Find & Replace Outdated Apps
As part of the aforementioned consolidation process, another business cost reduction tip is to regularly be evaluating the apps, tools, and services you’re using and comparing them to new ones on the market. When it comes to software, there’s new content and tools being developed on a daily basis, so there’s likely going to be new services emerging that can do exactly what your current services provide you but for a lot less. A great place to keep an eye out for new apps and tools is on Product Hunt.
Many established softwares on the market come with more premium price tags because they’re the leading tool in their industry, so you may be paying more for the brand name than the actual software’s functionality. Keep this in mind when you review the suite of tools that you use to operate your business and try to find other tools on the market that do exactly what your current tools do but for less. This way, you’ll reduce your operating costs without actually losing any kind of functionality. While doing this, you might also find tools that are a better fit for your business overall or ones that offer the exact features you need so you’re not overpaying for additional ones you don’t use.
Business Cost Reduction Tip #9: Barter
If you have any kind of leverage to offer, this is the time to use it. Since the costs of the apps, tools, and services you use to operate your ecommerce business can begin to add up quickly, if there’s any way to get access to a tool for free or upgraded features for a lower pricing plan option, it can relieve some strain off your operating budget and help you reduce it overall. One of our final business cost reduction tips to achieve this is to barter with companies to get free or discounted access to their service.
To achieve this successfully, you’ll have to be able to provide some value in return. Oftentimes, the only value that companies will deem worthwhile from their side is if you’re able to drive new leads or sales to their service, which likely means you need to have some sort of access to consumer groups you can promote the tool to.
For example, you could provide value to the company by blasting it to your social media followers, reviewing their tool on your blog, sharing the tool with forums and groups you’re a part of, offering a testimonial or review, being a guinea pig to try out their new features on, offer to be a case study for a more favorable rate, etc.
Take into consideration the apps, tools, and services you’d like free or discounted access to and think about what kind of leverage you can offer those companies in order to barter with them. When you reach out to them, it also might be worth asking them if there’s anything they need in particular that you can offer them just to see what they say. The key point here: Find your leverage and use it to your advantage to reduce your business’ operating costs.
There you have our roundup of the top 9 business cost reduction tips we use to keep our operations lean and efficient. We hope you’ve learned something from these tactics and that you’ll use some or all of them to reduce costs within your own business! In particular, don’t forget to invest early in startups, ask for discounts, wait for Black Friday and constantly be editing and curating your suite of tools so you’re never overpaying for any services you’re underusing. Using even a few of these tips can have a substantial impact on your bottom line and an overall positive effect on your profit margin earning potential.