Cost Reduction Techniques

Major Airlines are now charging solo flyers up to 70% more; here are some tips on how you can avoid paying extra American Airlines, Delta, and United are reportedly charging more when you book by yourself as opposed to with a group or as a couple. The reason? Revenue managers believe you are more likely to be a business traveler when flying by yourself, as opposed to a group more probably leisure customers. There is nothing new about airlines targeting routes and timing that are lower in price elasticity. I have noted for decades that you pay a big premium for a same day round trip on European business routes for example. In the USA, the "Saturday night Stayover" rule has unlocked significantly lower fares under the assumption that a business flyer will not want to give up their weekend away from home. Now what about this "solo flyer pays more" new "enhancement?" The frequent flyer blog site "View from the Wing" provides examples on AA routes out of Charlotte, where identical timings return the following fare quote: $511 per person if booked for two people $765 for one person Continuing to look at AA and flights out of Charlotte, 2 passengers flying together in August to Fort Meyers pay $210 each, while a solo flyer pays $422. In other words, "1 for the price of 2," ++! The Economist noted this week that "American is deploying the technique the most enthusiastically, sparking outrage in the travel blogosphere." USA Today in their business travel column expanded: "We stumbled upon a new pricing strategy that was not very widespread but no less troubling at the nation’s three largest airlines." As businesses watch their T&E budgets more carefully than ever before, and managers are hesitant to spend on flights, here are a few suggestions that the creative frequent flyers have come up with: 1) Book for two passengers 2) Call the airline and split the PNR (Passenger Record) in two 3) Cancel the second passenger and refund the ticket Note that this could lead to an audit however and you being required to pay the fare difference, which is far from an optimal outcome. A better approach: 1. Use flight search engines in the "incognito" mode (Google Flights I find to be especially good for this.) 2. Avoid airlines that are applying the surcharge (so especially AA at the moment it seems.) 3. Understand if you can arrange to fly with a colleague (if possible.) If you are planning overseas trips, note it is thought to be more expensive if you reserve your ticket on a Sunday (regardless of day of travel,) and/or if you use an iOS device. Why? Handheld device (especially Apple) customers are thought to be less price sensitive it seems. Lastly, consider alternatives: for example, in Europe and much of Asia, High Speed Rail is far lower impact environmentally. If you are organizing a conference, select locations where fares are lower. What are your approaches to saving on business travel? Photo: Shot on my iPhone. Strategy is Mastery.

Innovation Doesn't Need A Big Budget, Rethink Product Development With Jugaad (Making the most with what you have) Jugaad is an innovative approach to problem-solving that originated in India, characterized by resourcefulness and creativity in overcoming constraints. It's a mindset of doing more with less, emphasizing: Harnessing the spirit of "jugaad"—a Hindi term signifying resourceful and frugal innovation—can revolutionize product development in emerging markets. Case in point is a DIY stove & water heater which serves as a powerful example of this principle. Here are some basic principles of Using Jugaad in Product Development, that can be useful to Product Builders and Innovators - 1/ Frugal Innovation: Create cost-effective solutions using minimal resources > Design products for maximal value with minimal investment (time, money resources) 2/ Understand customer behavior: As Steve Blank famously said ‘Get out of the Building’ > Its important to have direct interaction with customers and stakeholders outside the office environment to validate your business hypotheses. > This approach is central to customer development methodology >It works to gather firsthand insights, validate assumptions, and refine your products based on real-world feedback 3/ Resourcefulness: Finding clever ways to solve problems with limited means prioirtise affordability and simplicity > Design products that cater to diverse needs, address multiple challenges, uses readily available material to build. This stove, which cooks food and heats water, is a perfect example. 4/ Think Sustainability to minimize environmental impact > With rapid population growth emerging markets, it's crucial to develop solutions that make efficient use of materials The DIY stove-water heater embodies the essence of jugaad Now, I would love to hear from you - > What are some practical ‘jugaad applications’ you use in your daily life?  > What’s the most creative solution you’ve come up with using limited resources? If you find this post helpful, please Repost to share with your network. Save this post for future reference when you need to revisit these principles.

10 tactics to control costs A guide which provides you the tools for cost reduction When I was head of finance, we were facing a challenge: → How to reduce our hourly rate to stay competitive This became my number one priority to help the business And we succeeded to decrease our hourly rate by 3% while inflation was up! Today I am sharing the tactics to reduce costs: 1. Budgeting and Forecasting: • Importance: Plan and estimate costs, revenue, and expenses. This is where you can get your team to commit on cost reduction. • Focus: Use accurate data and update budgets regularly. 2. Variance Analysis: • Importance: Compare actual performance with budgets to identify deviations. If you found a variation, there is a big chance that you have a topic to explore to reduce costs. • Focus: Investigate significant variances for improved accuracy. 3. Cost Allocation: • Importance: Distribute indirect costs for accurate pricing and control. • Focus: Maintain fair and updated allocation methods. 4. Activity-Based Costing: • Importance: Assign costs to specific activities for better resource allocation. • Focus: Identify and measure cost-driving activities accurately. 5. Zero-Based Budgeting: • Importance: Justify every expense to optimize resource allocation. • Focus: Balance rigor with operational continuity. 6. Cost-Benefit Analysis: • Importance: Compare project costs with expected benefits. • Focus: Consider tangible and intangible factors. 7. Cost-Volume-Profit Analysis: • Importance: Understand how sales, costs, and pricing impact profitability. • Focus: Validate fixed and variable cost assumptions. 8. Inventory Management: • Importance: Optimize inventory levels to reduce costs. • Focus: Use EOQ and JIT techniques for efficiency. 9. Vendor Management: • Importance: Evaluate and maintain supplier relationships. • Focus: Assess performance and diversify suppliers. 10. Procurement Management: • Importance: Acquire goods at the best cost with quality. • Focus: Establish clear procurement processes and collaboration. 👉 What is your favorite method to find cost reductions?

"Demand can’t be managed nor made intelligent” I hear this all the time from "industry experts". But it's wrong. At Octopus, we've been able to consistently achieve 30-50% decrease in peak energy usage by managing thermostats. ERCOT's energy-only market highly rewards this type of customer flexibility. While competitors struggle with 50% override rates, we've been able to achieve 5-10% override rate. All of this is because we're not focused on demand response. Instead, we're focused on customers and learning about each individual one. And hence true customer-centric flexibility. Today's ERCOT forecast is for "just enough supply to satisfy demand". Yes, we should build more supply. And we're doing so rapidly in Texas. But there are also GW of flexible demand to unlock. We can avoid many, maybe all, of these grid challenges by rewarding customers for providing flexibility. We do this through our Intelligent Octopus product where Texans get ~25% off their energy rates for choosing the flex-based product. That's $600-800/yr back in Texans' pockets. Flexibility creates deflationary loops: lower costs, lower carbon, more resiliency. And consumer flexibility is the most untapped oppty.

Most restaurants measure labor wrong. The profitable ones track this metric instead. It changes everything: Labor percentage is the biggest lie in our industry. I watched a restaurant celebrate hitting 28% labor. They went out of business 90 days later. Meanwhile, my client runs 34% labor. And banks $12K more per month. The difference? They stopped tracking percentages. Started tracking productivity. Here's what actually matters: CPLH - Covers Per Labor Hour It's the only metric that tells you if your team is making you money. Real example from a $3.5M restaurant: Before focusing on CPLH: • Labor: 31% ($1,085,000) • CPLH: 1.84 • Annual profit: $186,000 After 8% productivity improvement: • Labor: 28.6% ($1,041,600) • CPLH: 2.0 • Annual profit: $329,400 Same staff. Same wages. Just better productivity. The formula is simple: Total Covers ÷ Total Labor Hours = CPLH But here's what most operators miss: No two restaurants are the same. Your CPLH depends on: • Employee experience levels • Kitchen and dining room layout • Training quality and systems • Section sizes and table turns • Manager presence and leadership • Menu complexity • Service style That's why comparing to other restaurants is pointless. Even within the same brand. Compare to yourself instead. Here is how they did it: • 4% more guests (better marketing & service) • 4% fewer hours (smarter scheduling) • Result: 8% productivity gain That's $143,400 more profit per year. From focusing on one metric. The shift is simple: —> Stop asking "What's my labor percentage?" —> Start asking "How can I improve productivity?" • Stop comparing to industry benchmarks. • Start beating your own numbers. Because you can't deposit percentages. But you can deposit productivity gains. What's your current CPLH baseline? Once you know that, you can start to make a real impact on the entire model. And drive profit you didn’t realize was there. PS - Comment "CPLH" below and I'll send you my calculator that shows exactly where you're leaving money on the table.

2-sided Contracts for Difference (CfD) – a good model to ensure the offshore wind expansion.   What does it take to achieve the ambitious offshore wind expansion targets in Germany and Europe? Among other things, investment security for the developers' projects and the supply chain. This is offered in particular by 2-sided CfDs. They have been introduced in several markets and have become an effective tool for the expansion of offshore wind across Europe.   The primary function of a 2-sided CfD is to reduce future electricity price risk for producers as well as consumers, thereby decreasing costs and leveraging the potential of offshore wind. With two positive effects: Lower financing costs meaning a lower levelised cost of energy and reduced risk of project cancellations. Under a 2-sided CfD, governments not only make payments to the developer, they also receive payments when the electricity price exceeds the CfD price.   We at RWE believe a well-designed and inflation-indexed 2-sided CfD, in line with the EU Electricity Market Design, should become the standard of choice for offshore auctions everywhere.   Wherever this is not the case and renewables projects have to be realised under a merchant regime, it is crucial to remove any remaining barriers to Power Purchase Agreements (PPAs) and to further facilitate them.   2-sided CfDs should become a key instrument for the energy transition. Hence, we welcome that the regulatory discussion on how to design specific CfDs is gaining pace.

🥊 Our margins just got punched in the face. But we’re not taking it lying down. The new tariffs hit us with a 15% increase on all materials sourced from China. We’re all feeling the pain. Margins are under attack — and no one’s coming to save us. So I opened up Notes on my phone and started writing. Let me walk you through the Obvi Tariff Survival Plan: 1. Moving 25% of production to Mexico Zero tariffs. 3-week lead times. Lower currency risk. We’re shifting a quarter of our production within 90 days. 2. Front-loading Q2 inventory We’re placing bigger orders now to blend costs across Q2–Q3. Cash flow takes a hit short term, but it buys us time to optimize SKUs without a margin cliff. 3. Renegotiating every supplier Lower MOQs. Net-60 terms. Freight support. We’re offering longer-term commitments in exchange. 4. Testing SKUs with Supliful No upfront inventory. No cash tied up. Just fast tests on upsell SKUs to boost AOV with zero downside. 5. Cutting low-margin SKUs If a product doesn’t drive profit or repeat purchases, it’s gone. We’re being surgical — focus beats optionality when under pressure. 6. Redesigning packaging to cut DIM Slimmer scoops. Compact containers. Thinner seals. Targeting a 15% reduction in shipping costs with no drop in CX. 7. Simplifying bundles The bells and whistles (shakers, scoops, freebies) looked nice but killed margin. We’re trimming bundles down to what customers actually value. 8. Testing small price increases with smarter messaging +5–7% pricing paired with added perks (free shipping, loyalty points).  Perceived value > price. 9. Re-examining HTS codes We’re reviewing every import classification with our broker. Looking for reclassifications and filing exclusion applications. Don't just eat the tariff — challenge it. 10. Diversifying supply in Vietnam & Thailand We’ve got samples in motion for 2025 SKUs. China still plays a role, but single-source manufacturing is too risky now. 11. Exploring bonded warehouses Why pay duties before fulfillment?  Bonded warehouses let us delay those costs and manage cash flow more strategically. 12. Scaling international with OpenBorder Intl customers = higher AOVs and lower CACs. OpenBorder helps us scale globally without operational chaos. 13. Moving to domestic 3PLs  We’re in RFPs with two U.S.-based 3PLs. Avoiding double-duty, speeding up shipping, and reducing customer tickets. 14. Being radically transparent with customers We’re updating PDPs, emails, and SMS to explain changes. Customers stick with you if you give them the “why.” Trust > Transaction. 15. Get leaner The tariffs weren’t just a problem — they were a wake-up call. This was the push we needed to trim fat, tighten ops, and rebuild for what’s next. 💬 What’s your go-to play for defending margin in 2024? Drop it below — let’s build the DTC Tariff Survival Guide together. Know someone struggling with tariffs? Share this post. Hopefully it helps.

I reduced our Annual AWS bill from ₹15 Lakhs to ₹4 Lakhs — in just 6 months. Back in October 2024, I joined the company with zero prior industry experience in DevOps or Cloud. The previous engineer had 7+ years under their belt. Just two weeks in, I became solely responsible for our entire AWS infrastructure. Fast forward to May 2025, and here’s what changed: ✅ ECS costs down from $617 to $217/month — 🔻64.8% ✅ RDS costs down from $240 to $43/month — 🔻82.1% ✅ EC2 costs down from $182 to $78/month — 🔻57.1% ✅ VPC costs down from $121 to $24/month — 🔻80.2% 💰 Total annual savings: ₹10+ Lakhs If you’re working in a startup (or honestly, any company) that’s using AWS without tight cost controls, there’s a high chance you’re leaving thousands of dollars on the table. I broke everything down in this article — how I ran load tests, migrated databases, re-architected the VPC, cleaned up zombie infrastructure, and built a culture of cost-awareness. 🔗 Read the full article here: https://lnkd.in/g99gnPG6 Feel free to reach out if you want to chat about AWS, DevOps, or cost optimization strategies! #AWS #DevOps #CloudComputing #CostOptimization #Startups

Cost cuts can hurt more than you think. The way you cut costs can destroy value. I know you're working hard. You're asking your team to tighten their belts. You're doing the right thing each week. And yet service slips and savings are lost. Here are 7 reasons cost cuts fail (and how to fix them): 1. Equal cuts everywhere ⇀ You slice good and bad spend together. ⇀ Do this: set guardrails, cut around them. 2. No cost tree ⇀ Work hides in handoffs, waits, and rework. ⇀ Do this: map steps, time, and errors. ⇀ Then eliminate one high cost step each week. 3. Too many approvals ⇀ Extra approvals slow work without lowering risk. ⇀ Do this: one owner and one sensible check. ⇀ Delete any approval with no risk case. 4. Over-serving low margin work ⇀ Gold service on bronze margin burns cash. ⇀ Do this: tier service by profit. ⇀ Move bronze to self-serve or slower lanes. 5. Automating chaos ⇀ Bad process runs faster and breaks harder. ⇀ Do this: standardise steps before tools. ⇀ Automate only once the path is stable. 6. Hope-based supplier pricing ⇀ List price is not always fixed. ⇀ Do this: build a simple should-cost sheet. ⇀ Trade volume and fast pay for lower cost. 7. Large scale programs ⇀ Huge plans stall and savings leak back. ⇀ Do this: run a 90 day pilot with owner. ⇀ Show weekly wins. Track savings. Stop trimming muscle to look efficient. Cut the right costs and keep growing. ------- ➕ Follow Jonathan Maharaj FCPA for finance‑leadership clarity. 🔄 Share this insight with a decision‑maker. 📰 Get deeper breakdowns in Financial Freedom, my free newsletter: https://lnkd.in/gYHdNYzj 📆 Ready to work together? Book your Clarity Session: https://lnkd.in/gyiqCWV2

A nice example of a non-optimized operation of a home PV-battery energy system. The graphics shows the PV production on a clear sky day earlier this week. • grey area: PV energy sold to the grid; • green area: PV energy stored in the battery; • yellow area: PV production directly used by domestic appliances (no EV here). • green line: energy level of the battery. Why is this operation non-optimized? The system follows a rather straightforward approach: as long as PV production exceeds consumption, the surplus charges the battery. When PV production drops, the battery is discharged to meet demand. However, this approach leads to charging the battery with well-priced PV production between 8 and 10 AM, as shown in the spot price chart (top right). Later in the day (10 AM – 6 PM), energy prices drop significantly, sometimes even turning negative. So, what to do? A few options to improve the situation: • Use a timer: delay battery charging until after 10 AM. • Set a price threshold: Only charge the battery when spot prices fall below a certain value. • Optimize with foresight: use day ahead prices to schedule charging during the lowest price periods. Potential challenges: • Accurate PV production forecast are essential. The example reported is from a clear-sky day with near-maximum production – cloudy days complicate things. • The added engineering complexity might not be economically justified for domestic systems. Other thoughts? DTU Wind and Energy Systems