Key Accounting Ltd.

Key Accounting Ltd. Thorns, Main Road, Eyam, Hope Valley, Derbyshire. S32 5QW.

Key Accounting Ltd

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Questions?

Call us on 01433 630902

How to Cut Costs:

Simple Stuff That Works

Put your expenses under the microscope to identify where you may be able to cut costs. Pull out your most recent set of accounts, or look through your bills to work out how much you are currently paying.


It pays to shop around, so contact alternative suppliers, or use price comparison websites to see if you can get these costs down.

Take a look at sections 6, 7 and 8 of our Improve Your Profits page to identify which profit drivers and strategies could have the greatest impact on your costs.


How we can help you:








Some examples of Cost Drivers:

1. Overheads per head/hour/square foot

2. Manufacturing cost per unit

3. Sales mix measures - such as the proportion of sales coming from the most profitable and the least profitable 20% of products. Needless to say, these sort of sales mix variables can have an enormous impact on the gross margins and success of the business.

4. Number of invoices raised and average value of each invoice. (NB: A small number of large value invoices tends to attract economies of scale in processing and delivery costs compared to a high number of small value invoices)

5. Raw material costs - perhaps measured by a weighted index of prices for the most important raw materials

6. Marketing costs per sales lead

7. Payroll costs - in total, per head or per hour

8. Overtime costs

9. Break-even point

10. Percentage discounts negotiated from suppliers’ price lists

11. Product reliability (could have an enormous impact on repair, return and warranty costs)


If you would like some help with any aspect of cost cutting for your business just give us a call on 01433 630902. Remember that our general advice is free.


For all your main utilities listed left, work out and make a note of this year’s charge, then…

…Find the best alternative deal from another supplier to see how much you could save

Production or other main cost of sales...

Next take a look at the main cost involved in production in your business. This will be the cost of whatever your business makes, sells or costs involved in a service you provide - raw materials or  perhaps salaries, it depends on what your business does.


Identify  your main cost of sales and look at ways of getting a better deal

Now make a list of every single thing that your business spends money on

Ask yourself the following questions about every single element of your business’s cost base:



Although these questions should be asked about all of your costs, it makes sense to concentrate initially on your largest costs. After all, the larger the costs the larger are the potential savings.


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