Cost drivers

The things that make you more expensive. Cost drivers have a bad wrap. Nobody likes things more expensive than they have to be. So identify your cost drivers, address them and everyone wins. You save money and you pass some of those savings on to your customer. Elegant in its simplicity.

Until it’s not. Just because something drives cost does not mean removing or reducing it will improve profit margins. It could create a PR incident and migrate customers to a more expensive competitor.

A far better question: ‘What drives costs without increasing value?’ Your customers don’t want the cheapest product. They want your product in it’s most efficient form.

Cutting costs that increase value is a method of securing price competitiveness. It’s also a race to oblivion.

Stephen Walker

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