One-time and periodic costs

One-time cost

This cost is the cost you pay only once. Rent advance, paying your CEO a signup bonus, incorporating a company, equipment rental security deposit, one-time equipment purchase are examples of one-time cost.

Ways to reduce one-time cost in business

If one-time cost is higher for your business then you can split this over the forthcoming months. For example, you could negotiate signup bonus disbursement for your CEO along with his monthly paycheck.

Another example is you could take a personal loan to pay for rent advance such that the amount will be evenly spread over the forthcoming months.

If you are facing a high one-time cost then the best option is to look for creative ways to spread the amount over the forthcoming months.

Periodic cost

This cost is the cost you are obligated to pay every month or within a set period of time every time until the payment period ends. This payment period is typically enforced by a contract. A typical example is a rental agreement which specifies the payment start date and end date and the day of the month the payment is due. This includes ongoing costs such as utilities, wages, monthly software licensing, etc.

Ways to reduce periodic cost in business

If the periodic cost is higher for your business then you can negotiate for a lesser monthly amount by offering a higher initial deposit. For example, let us say the rent is 500 per month and the deposit is 5000. You can talk to the leasing officer and request for 400 per month with 6000 deposit.

You could also negotiate to bring down this periodic cost by offering a longer contract period. For example, let us say the rent is 500 per month for 12 months. You can talk to the leasing officer and request for 400 per month with 15 months.

Yet another way to negotiate to reduce this cost is by requesting a price match. For example, let us say the rent is 500 per month and you already have found something for 400 per month. You can share the copy of the lease agreement and ask for a price match

If you are facing a high periodic cost then the best option is to further classify this cost into essential and optional cost and do a further feasibility analysis to eliminate optional cost.