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Expenses Small Businesses Can Pass On to Customers

Expenses Small Businesses Can Pass On to Customers_Moula_Unsecured Business Lending

For small business owners the importance of cash flow cannot be overstated. When sales or payments slow down, your first instinct is to find areas to trim expenses.

Should you cut down on marketing expenditure or maybe your training costs? Before you go sacrificing things like business opportunities and employee skill-building, examine whether you’ve missed passing on costs to your customers. Small business owners often sell themselves short in this area. Your product or service fulfils a need and delivers value; why short-sell it? Here are some reasonable small business expenses to consider passing on to customers.

1. Supplies Used for Customer Projects

Do you have to buy specific supplies needed for a one-time or ad-hoc project? Will you stow it away in your supplies cabinet, never to use it again? Then it’s important to charge your client for it. Also include on the invoice any additional costs of printing or copying that you don’t usually encounter for similar projects.

2. Commuting Costs

Are you required to travel to the client’s premise for on-site work or training, even if for a few days? The small business expenses for back-and-forth commute can add up to quite a large amount. There’s no reason why this shouldn’t be included in the client invoice. Communicate your expectations to clients in advance to prevent misunderstandings from arising later.

3. Consulting Fees

Free consultation is one of the chief selling points of a professional service. But it can quickly become a double-edged sword if your customers won’t stop calling you for numerous questions and clarifications. It is reasonable to charge a consultation fee for the advice and knowledge support you provide to clients.

4. Mailing Costs

If some of your products need to be physically shipped to customers, it makes sense to charge them for postage, mailers, packaging and other shipping related costs. The mailing costs on heavier items can add up. Consider a policy where you charge by weight and not the cost of the product.

5. Credit Card Fees

If you accept credit cards, you can charge customers a credit card fee – a checkout, surcharge or convenience fee as it’s referred to. The major card brands each have their own policies on credit card fees, so make sure you understand their guidelines thoroughly.

6. Rising Production Costs

If the costs of production increase due to a rise in materials or other input prices, it makes sense to pass them on to customers. When your expenses increase and margins are affected, it will be easy to explain to customers why your prices had to go up.

7. Scope Creep

Six months ago, they were your new clients. Today, they’re regular clients entrusting you with bigger projects. But your price has remained the same even though you’re technically doing extra work for them. Scope creep, which refers to the process by which a project grows more than its originally anticipated size, can cost you big. Ideally, you should plan for the possibility of scope creep at the beginning of the project. If the scope of your work increases, then transfer the expenses you’ve incurred to your customer. Small business expenses need to be tracked frequently to understand where you can plug unnecessary costs while also identifying the essential and non-essential items costing you a not-insignificant amount each month/year.

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All the thoughts, ideas and musings from the Moula team! Covering everything from work/life balance to general finance tips plus everything in between!

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