Your Costs Are Rising Faster Than Inflation. Here’s Where to Look First.

Freight is up. Commercial insurance is up. Energy bills are up. And unlike broad inflation, which at least gives customers some expectation that prices will move, these costs land on the business and mostly stay there.

It’s likely you can’t add a freight surcharge to much of what you sell. You can’t recover an insurance premium increase from someone buying a gift. The hit is yours.

When you can’t push costs out, you have to find them inside the business. That means going through the numbers properly — not a rough sense that things feel tighter, but an actual look at what each product and category is genuinely returning.

Start with your cost of goods

Supplier prices drift upward in ways that are easy to miss. A new pricelist arrives, gets loaded, but the sell price doesn’t move with it. A margin that was 42% quietly becomes 35%. Across a full category, that’s a meaningful revenue leak — and it never announces itself. It just slowly gets worse.

Pull a margin report by category. Look for the gap between what you expected to make and what you’re actually making. Your POS software should show you cost versus sell price at product and department level. If it doesn’t, that’s the first problem to fix.

Freight needs to sit in your product cost, not your overheads

If freight is buried in general expenses rather than allocated to product cost, your margin reports are giving you a false picture. A line that looks like 40% gross margin may be 27% once freight is included properly.

Review how freight costs sit in your buying calculations. If a supplier charges freight on small orders, that cost belongs in the unit price. It changes which products are actually worth reordering.

Electricity is usually the most fixable overhead

Most independent retailers have never looked closely at where their power goes. Lighting — particularly older fittings running long trading hours — is often the biggest controllable cost. LED replacements frequently pay back within twelve months. That’s a real margin improvement that requires nothing from your customers.

Insurance: at least have the conversation

Premiums have risen sharply. Many retailers are still carrying the same policy they set up several years ago without questioning it. A broker conversation once a year costs nothing. Sometimes it finds savings. Sometimes it finds gaps in cover that would be expensive to discover another way.

Use your POS data to find the dead weight

Some products look fine on their own but are quietly dragging performance down. Slow-moving stock with thin margins costs twice — in tied-up cash and in shelf space that could hold something better. Tower Systems POS software lets you run reports across sales velocity, margin contribution, and stock turn by product or department. That’s where the picture gets clear.

You don’t have to do this all at once. Pick one category. Run the numbers. Fix what you find. Then do the next one.

The costs aren’t going to come down on their own. But plenty of margin leaks are fixable once you know where they are.

---

Tower Systems POS software gives independent retailers the reporting tools to find and fix margin leaks. Call 1300 662 957, email sales@towersystems.com.au or visit www.towersystems.com.au.