Three Ways to Boost Profits: A Deep Dive into Cost, Sales, and Pricing

The Three Main Levers of Profitability (Part 1): Decreasing Costs

When it comes to boosting profitability and cash flow, there are really only three fundamental moves a business can make:

1. Decrease Costs/Spending
2. Increase Sales Volume
3. Raise Prices

Most owners rush to chase sales. But until expenses are tuned, more revenue often brings even higher operating costs. If you are already losing money, selling more only multiplies the loss. That is why this three-part series starts with cost cutting. Tighten spending first, so every new dollar keeps more in your pocket and profit grows with each sale.

Step-by-Step Cost Reduction Strategy

1. Perform a Thorough Expense Audit

   • List every expense. Don’t stop at rent or payroll—include software subscriptions, small recurring fees, memberships, and any other outflows.
   • Ask “Why?” for each line. Is the cost truly necessary and delivering measurable value? If not, consider eliminating, reducing, or renegotiating it.

   To make this simple, use the attached expense analysis template called the PRU Analysis.

   1. Export data: Pull your last 12 months of expenses (by category or by vendor).
   2. Open the attachment: Paste your data into the template.
   3. Tag each expense in the PRU column:

   P — Profit

   Essential to delivering value to customers. Keep these, but still monitor and keep costs as low as reasonably possible.

   R — Reduce/Renegotiate

   Opportunities to pay less for the same value, or get more value at the same cost.

   U — Unnecessary

   Safe to eliminate with no impact on customer value.

   After tagging, sort or filter by U and R to identify quick wins, then create action items to eliminate, reduce, or renegotiate those costs.

Laying the Groundwork for a Healthy Business

Cutting costs isn’t about depriving your business; it’s about streamlining operations, eliminating waste, and building a healthier, more profitable foundation. By lowering unnecessary expenses, you increase efficiency, free up resources, and strengthen your bottom line—ultimately helping you achieve both your personal and professional goals. With tighter cost controls in place, any future growth in sales or pricing flows directly into higher profits.