Five ways to transform costs to create value

By PwC

The world has changed. Your business is changing. Is your cost base keeping pace? The answer has critical competitive implications following the lifting of lockdown restrictions in England, and at a busy time for strategic M&A activity across all sectors. The evolution of cost bases is a critical factor for businesses to continue to drive value.

So why is it time to rethink costs? When people think about costs, the first priority is how to get them down. However, as crucial as this is, it’s only part of the story. As your business changes, you need to think about whether resources are being targeted where they can deliver the greatest return – ‘good costs’ – or being wasted – ‘bad costs’.

‘Good costs’ enable businesses to move closer to customers, differentiate their capabilities and develop new value propositions. Right now, this includes directing spending towards digital transformation and the transition to a low carbon economy. In firms PwC have worked with, typical examples of good costs include funding the shift from bricks and mortar sales to online engagement and next day home delivery. Other examples include stepping up investment in fast-growth ‘green’ opportunities.

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