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7 ways to cut costs and maximize profits in your online business

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Every business aims to make great profit. Read our blog to learn how to cut costs and maximize profits in your online venture.

Recent technological advancements have encouraged many businesses to move online. According to Statista, internet sales account for 19% of global retailing. Forecasts show that the figure could approach 25% by 2026.

But even as your company sells big over the internet, you still must incur costs that come with the brand’s online presence. Unfortunately, you’ll reap small profits if you don’t cut these expenses. 

So, how can you cut costs and maximize the cash flow of your online business? This article discusses everything you need to know. 

Main costs in an online business

Before you cut costs, you must know which expenses to target in your strategy. Here are the leading e-commerce expenses you should expect:

Web development and maintenance

Once your site goes live, you’ll incur recurring costs, such as web hosting, domain renewal, and other design fees. 

Marketing expenses

They include costs related to advertising, search engine optimization, social media marketing, and other online promotions. 

Payment processing

Payment processors charge processing fees for every transaction you make through their platform. 

Software and technology expenses

You’ll likely need to purchase new software or update an existing one occasionally. So, include this and software maintenance expenses for tools like customer relationship management (CRM) in your budget. Furthermore, as businesses grow, managing financial operations and ensuring a streamlined revenue process becomes crucial. Partnering with a revenue cycle outsourcing company can help manage these complex tasks efficiently, freeing up your internal resources to focus on core business activities. By considering both software maintenance and strategic outsourcing, you can optimize operations and potentially increase profitability.

Wages, salaries, and benefits

Shifting to an online office doesn’t mean you’ll eliminate all your staff. Of course, the number of team members may reduce significantly. But you still need a few people to maintain communication with customers, market your brand, and facilitate the shipping of products to consumers. Whether it’s a permanent team member or a contractor, they must receive their salaries or benefits. 

Inventory and shipping fees

If your business deals with physical products, you’ll have to cater for inventory storage, shipping, and other costs associated with fulfilling orders. Free shipping will attract many customers, but the logistics company will still demand their money. So, include this in your budget.

Legal and accounting fees

Like brick-and-mortar stores, online businesses must adhere to their corresponding legal requirements. 

Obtain a license and renew it regularly, depending on the jurisdiction within which your business operates. You’ll also need to keep your account records up to date, and that’s where accounting services, such as bookkeeping and tax preparation, come in handy.

How to cut costs and increase profit margins

Now that you know where most of your revenue goes, what next? You can start by minimizing your overhead costs as much as possible. 

Overhead are recurring costs you must pay even when your business isn’t operational. Unlike operation costs, these aren’t directly related to producing goods or services. 

While they’re relatively lower for online businesses, overhead and other expenses can quickly increase and stunt your brand’s growth. Consider the following tips to maximize your profits. 

1. Maximize on discounts

The best way of saving money and cutting costs is by taking advantage of coupons. Most service providers offer a discount for their products seasonally, while others do it regularly. 

For instance, a web hosting provider may offer their services at USD$6 per month. However, for even more cost-effective solutions, consider exploring inexpensive VPS shared, and alternative hosting plans. You can pay only USD$48 if you subscribe to an annual plan. That means you’ll save USD$24 per year for a more extended subscription.

You can also maximize your profits using free shipping coupons when shopping for supplies. Remember that some brands require a certain amount to activate the discount code.

2. Spend less on acquiring new clients

Acquiring new customers may be tempting, but sometimes it’s not a good idea for your online enterprise. It costs more to bring a new prospect than to retain one. Statistics suggest that businesses spend five times more on customer acquisition than retention.

So, focus more on retaining your current customers than bringing in new ones. You can still invest in attracting new prospects but ensure you plan to reduce customer acquisition cost (CAC). 

3. Negotiate with your suppliers

Most suppliers are willing to strike an agreement that favors both parties. The two main conditions they’d like you to meet are the order sizes and payment times.

If you can accommodate them in these areas, they’ll be ready to reduce their prices. It’s even better if you’ve worked with the supplier for long. Just propose your idea and work out a reasonable deal. 

4. Reduce the possibility of product returns

The rule of thumb in e-commerce is always to ensure that customers retain the products and you keep the profits. More goes on in the finance department apart from canceling a sale.

Some losses you incur when a client returns an item include shipping, storage, and packaging expenses. You’ll also need to set aside a budget for checking the product’s condition. If it’s damaged, then that’s another loss on top of everything.

Such cases are expected in an e-commerce setup, but you can minimize them. First, explain clearly what you’re selling on the product page so that customers can understand what they’re getting. Countercheck the orders too before initiating the delivery process. 

5. Invest in promotional campaigns

Inventory storage fees can quickly increase when you have stubborn items on the shelf. Plus, maintaining these products to remain in good shape can demand more money than you’d think.

As experts suggest, sometimes you have to spend more money to make money. When you strategically invest your promotional budget, you may make stubborn products more sellable. 

For instance, you can bundle them with popular items. This will improve the customers’ experience and may help attract new prospects.

6. Choose cost-effective marketing plans

Marketing is vital to the success of your online business, but it can be your Achilles’ heel as well. Some strategies demand more money and resources, yet they have a low return on investment (ROI).

Hence, you need to determine which marketing avenue helps you the most. Choose a campaign based on its ROI and eliminate guesswork. Experiment with less expensive channels, such as social media, blog posts, and influencer marketing. For a comprehensive approach to online marketing, consider partnering with a reputable webflow SEO agency. Their expertise in optimizing websites and driving organic traffic can greatly enhance your marketing efforts.

7. Re-evaluate your packaging plan

Package your popular products in smaller boxes that fit them perfectly. You can also combine the less popular items in one big box and use suitable materials to ensure their safety during transportation.

Moreover, consider adding a personalized touch with custom tissue paper with logo to further elevate the unboxing experience, ensuring that even less popular items in a larger box receive attention to detail and care. This thoughtful packaging approach not only safeguards your products but also adds a distinctive and memorable element to the customer's interaction with your brand.


Generating profits is the key for every online business. But you can only do that by minimizing overhead and operation costs. For instance, maximizing discounts can help you save money and generate more revenue than you spend. 

The good thing is there is a solution for every business. You just have to re-evaluate your budget and reduce or eliminate unnecessary expenses to increase your profits. 

April 20, 2023
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