Entrepreneurs love technology, but it comes at a price–literally. Technology costs money. No matter how basic that technology becomes, nothing is ever truly free.
How much money are you shelling out for technology? What if you could eliminate some tech expenses and keep more profit in your pocket? If you haven’t audited your tech expenses, here are 4 ways those expenses are eating up your profits.
1. Erroneous and bogus charges from service providers
How often do you check your invoices for erroneous and bogus charges? Are you absolutely certain you’re getting all the services you’re paying for? Is your internet connection as fast as it should be, or are you being throttled when live streaming?
While there are many vendors who don’t cheat their customers, some cheat their customers on a regular basis, hoping nobody will notice. Unscrupulous vendors might forget to apply credits and apply tariffs to your account in an attempt to evade paying their government-mandated fees.
No matter how much you trust a vendor, always review your invoices line-by-line and crunch your own calculations. Better yet, hire a professional auditor to review your invoices, especially for phone and internet services.
The largest benefit of hiring a professional is getting their expertise for negotiating new service agreements. Cost auditors can usually get better deals with lower prices since they can send plenty of business to service providers.
2. Shiny object syndrome
The grass is always greener, or rather, the technology is always shinier when it’s new. There’s something magnetically alluring about embracing a new technology that promises to revolutionize some aspect of doing business. However, new technology is expensive and will eat up your profits if it’s not a necessary investment.
Before rushing into new tech, for example, network component upgrades, find out if it’s necessary. For example, new network switches might increase your network speed, but do you need that increase in speed? Are you warranted in dropping tens of thousands of dollars on new hardware just to gain a little speed? Will you need to invest in a similar upgrade five years from now as your company grows? Can you wait five years until the technology is even better? Can you buy a cheaper version of the new tech?
Every technological upgrade sounds important when explained by the company pushing the upgrade, but they’re not all necessary. Be selective with the technology you adopt. If you can’t connect the upgrade to ROI, it’s probably not necessary.
3. You don’t need a $10,000 website
Professional website developers all want you to believe that you need an expensive, custom website to thrive in your industry. The truth is, some businesses require custom sites, but many don’t need anything more than a simple site made with free software.
Here’s why you shouldn’t spend a ton of money on a new website:
- You’ll change the content and design many times over the years. What you end up with, even in a year, will probably be completely different than what you originally created.
- The first version of your website will never completely meet your business needs. You’ll probably change content management systems, which means any money you spent on a custom design will be virtually worthless on another platform.
- Simple designs convert better. Why? They deliver unimpeded value and clear calls to action. Sites don’t have to be ugly to convert, but simplicity reigns supreme.
Instead of paying tens of thousands of dollars for a custom website design, get a WordPress template from Themeforest, and customize the content to speak directly to your target market. If you feel inclined to spend thousands of dollars on your website, spend it on digital marketing.
4. Monthly membership fees are draining your profits
How many monthly or yearly subscriptions does your company have? One? Five? Twenty? It’s hard to tell what the average is because it seems every service has gone to the subscription model, including software that used to come with a one-time fee.
Under scrutiny, you may find some of your subscriptions to be a waste of money.
Software subscriptions waste money by:
- Not providing different tiers or customizable plans.
- Prohibiting sharing login credentials, thereby forcing you to get individual subscriptions for employees.
- Being unused and forgotten, yet automatically billed.
- Getting you hooked on the product and sold upgrades you don’t need.
- Providing you with access to subpar talent. For example, paying a monthly fee to have infinite access to graphic designers usually results in mediocre work that costs more over time than hiring a professional as needed.
Be brutal when cutting expenses
When looking for expenses to cut, don’t hold back. Don’t buy new tech unless it will contribute to an increase in ROI.
Jenna Cyprus is a freelance writer from Renton, WA who is particularly interested in travel, nature, and parenting. Follow her on Twitter.