And if they only care about the price, maybe this type of client doesn’t interest you. If your product or service is excellent, your customers will value it well regardless of the price. Do not underestimate the value of your product or service just because you want to sell more. And I can tell you that it’s not helpful and it won’t contribute to your business sustainability. It’s not my intention to lecture you since I’ve made that mistake in the past. 👉🏽 Sometimes, because of our will to sell, we make mistakes like offering excessive discounts. I’m sure your customer, and you can happily meet somewhere in the middle. Your customer has purchasing power but you also have the power to serve their needs. You have to be able to distinguish both things. 👉🏽 There is a thin line between customer service and servility. Therefore it’s not fixed but variable, depending on the quantity that customers buy. 👉🏽 The more they buy, the bigger the discount your customers receive. The discounts you offer to your customers by purchase volume. On the other hand, if costs go down, you can lower the price. If these go up, you’d have to increase the price of your products. They can impact the price of your products or services. These are the variable costs that directly affect the production of goods.
Specific taxes (which vary throughout the life of your company) or new fees that did not exist when you created your business. The same applies to delivery services: does that of your choice meet the quality standards of your company? Have you ever considered the fuel cost of your vehicles? It can affect your expenses considerably. These don’t usually affect the cost of your products or services.Įquipment repairs due to failures or accidents that are not included in your insurance policy. These are the variable costs that have to do with your day to day operations. I’ll also divide them into their 2 main categories: 1. I will focus on those expenses that affect you the most as a small business owner. The list of variable expenses can be endless.
#Variable expenses how to#
This article will help you understand everything you need to know about variableexpenses, and how to reduce them. Discretionary or non-essential expenses.There are in total of 4 types of business expenses: There are unpredictable factors (such as Trump’s import tariffs) that cannot be anticipated, but having a solid financial plan in hand will minimize their impact on your business. I know what I am talking about since I have lived it in the first person. Variable expenses can jeopardize the viability of your company. I will also provide you with some financing alternatives to consider. Let’s first understand what a variable expense is, and then I will give you some tips to reduce those that affect your small business. Therefore, you must learn how to reduce these variable expenses.
Every little money you can save will have an impact on your business growth. And I want to communicate this message clearly: you cannot escape from your variable expenses, that’s true, but you can face them and find ways to reduce them.Įvery penny counts. Like you, I have to face my business variable expenses every day. Suddenly, your brain starts to spin: how can you keep those variable expenses under control, if they are volatile and unpredictable by nature?
When you hear the word “variable” attached to “expense,” most likely, uncertainty begins to take shape.
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