Rising Business Overheads: How to Protect Your Margins

If your costs feel like they’ve been creeping up every time you look, you’re not imagining it. Almost every bill seems to have gone up lately, from wages to insurance, and plenty of small businesses are feeling the squeeze.

If that sounds familiar, you’re far from alone. AMP Bank GO’s new Small Business Cost Pressure Index found that key small business costs rose by 24.6% between March 2020 and March 2026, with insurance, wages and interest the biggest drivers. And they’re on track to be up 27.1% by the end of the year.

So here’s the thing: you can’t control award wages or what your energy retailer charges. But you do have more control over your margins than it might feel like right now, and when it comes to saving money, every bit counts. Let’s look at what’s in your control and the practical steps you can take to protect your margins.

What’s actually pushing costs up?

It’s rarely one big bill that does the damage. Usually, it’s several smaller increases landing at once. Here’s why things might be feeling expensive right now:

• Wages and super: From 1 July 2026, the National Minimum Wage rose to $26.44 an hour, and award rates went up by 4.75%. Payday super also started on the same day, so you now need to pay super every time you pay wages, rather than quarterly. It doesn’t cost more overall, but it does mean money leaves your account more often.
• Insurance: Insurance is one of the fastest-rising costs for small businesses, and premiums have kept climbing for many.
• Card payments: Since 1 October 2026, you can no longer add a surcharge to eftpos, Visa or Mastercard payments. If you used to surcharge, that’s a cost you now need to cover yourself.
• Everything else: Rent, fuel, interest, supplier prices and software subscriptions all add up, especially the ones you set up years ago and haven’t looked at since.

You’ll especially feel these increases if you own a shop, café, restaurant or pub. And while none of them seem particularly huge on their own, together they can take a real bite out of your margins, which is why it’s worth keeping a close eye on every bill, no matter how big or small.

Start with your real numbers

Before you start changing things, get a clear picture of where your money is actually going. Most of the time, margins don’t just vanish overnight. Instead, they shrink a little at a time, often without you noticing.

Maybe a supplier has nudged up the price of a few lines, or a dish that used to be one of your best earners now costs more to make than it did last year. On their own, these changes don’t seem like much, but over a few months they can make a significant impact on what you’re left with at the end of the month.

A good place to start is by asking yourself a few simple questions:

• What does each product or dish cost you now? Not what it cost when you set the price, but what it costs today.
• What are your busiest and quietest hours? And are your staffing levels matching them?
• What’s selling, and what’s just sitting there? Your bestsellers and your slow movers both tell you something.

You might not have asked yourself these questions in a while, and the answers could be quite different from the numbers you’ve been working with. It’s also worth actually taking a look, rather than relying on memory or estimates.

Costs and sales patterns change all the time, so it’s worth checking in on them regularly. If you’re using a POS system, most of this information is already in your sales reports, and our reporting tips can help you get more out of them. Checking them once a week, rather than once a quarter, means you can spot a problem while it’s still small.

Build your roster around demand, not habit

For most retail and hospitality businesses, labour is the biggest cost, so it’s a good place to start. But that doesn’t mean you need to start cutting jobs or slashing hours.

In fact, cutting staff across the board usually backfires. Queues get longer, customers walk out, and your team ends up run off their feet. Plus, you risk losing someone who knows your business like the back of their hand. The trick is to have the right number of people in at the right times. We’ve all seen it: three staff leaning on the counter on a slow Monday morning, then one person struggling to cope with a packed Thursday evening.

Your roster should follow your current sales patterns, not one that made sense years ago. Here are some ways to save when it comes to labour costs:

• Compare sales with staff hours: Check your hourly sales against staff hours each week, and look for shifts where you’re consistently overstaffed.
• Stagger start times: That way, you’re not paying four people to stand around waiting for the lunch rush.
• Cross-train your team: One person can then cover two roles during quieter periods.
• Look after the staff you have: Recruiting and training someone new costs far more than keeping a good person, and our guide to reducing labour costs covers more on this.

It’s also worth checking that your payroll is set up for payday super, if you haven’t already. Since super now goes out with every pay run, mapping out your cash flow week by week will help you avoid any surprises.

Don’t be afraid to review your prices

This one is a little bit tricky, and many small businesses put it off until the last minute. Plenty of business owners feel awkward about putting their prices up, but absorbing every cost increase yourself isn’t sustainable. Most customers know costs have gone up for everyone, and a small, fair increase rarely puts people off.

Fortunately, you don’t have to make big, across-the-board increases to make a difference. Smaller, targeted changes usually work better. Let’s look at some practical ways of managing prices:

• Start with your bestsellers: A 20c increase on something you sell 200 times a week is worth more than a big jump on something nobody buys.
• Look at portion and pack sizes: Small tweaks here can protect your margin before you need to touch the headline price.
• Bundle items together: Meal deals or product bundles raise your average spend without changing individual prices.
• Use menu engineering: If you run a café or restaurant, work out which dishes are both popular and profitable, and give them the best spots on the menu. Our guide to menu engineering walks you through it.
• Explain the why: If you’ve got lots of regulars, they’ll probably notice a price change, however small. Rather than hoping nobody spots it, be upfront about it. A short Instagram post or a friendly note by the counter explaining that your costs have gone up goes a long way. Most customers understand, and they’ll appreciate you being honest with them.
• Factor in the surcharge ban: If you used to add a card surcharge, make sure your prices now cover your card fees, and remove any surcharge signs and settings from your till and website.

But don’t just set your new prices and walk away. Keep an eye on how each item sells over the next few weeks. Customers don’t always react the way you expect: some price rises go completely unnoticed, while others can quietly push people towards a cheaper option or somewhere else entirely. If something suddenly stops selling after a price change, you’ll notice straight away, and you can always bring the price back down or try a different approach before it starts costing you more than you’re gaining.

Stop paying for stock that doesn’t sell

It’s easy to think of stock as money in the bank, but if it’s just sitting on a shelf, it’s really cash you can’t use. In hospitality, it can be even worse, because unsold stock often ends up in the bin. The good news is that a few simple habits can make a big difference:

• Order based on what actually sells: Gut feel only gets you so far. Your sales history shows exactly what’s flying out and what isn’t, so you can order with confidence. Our guide to retail inventory management explains how.
• Set low-stock alerts: That way, you’ll know when it’s time to reorder, without overbuying “just in case.”
• Keep track of waste: Try logging everything you throw away for a few weeks. Most businesses are surprised by how much it adds up to, and it often points straight to the items you’re over-ordering.
• Clear slow-moving lines early: Use bundles or promotions to shift them before they turn into a write-off, and think twice before ordering them again. Our guide to fighting dead stock has more ideas.

Get smarter about energy

Energy is one of those costs that can feel completely out of your hands. Although you can’t do much about your tariff, you can control how much you use. Even small changes can make a real difference, and here are a few ways you can do it:

• Check you’re on a good deal: Benchmark energy prices for small businesses dropped in several states this financial year, with some reductions of up to around 20%, but that doesn’t mean your retailer has automatically moved you onto a better plan. Compare your current rate with what’s on offer.
• Switch off what you don’t need: Coffee machines, extra lighting and equipment left on standby can quietly run up your bill overnight. Make switching them off part of your closing routine.
• Look after your fridges and freezers: Keep them serviced and check the door seals regularly. A fridge that’s struggling to stay cold works much harder and uses far more power than one in good condition.
• Upgrade old equipment: If an ageing fridge or oven is guzzling power, it might be time to replace it. The $20,000 instant asset write-off is now permanent for businesses with a turnover under $10 million, which can make an energy-efficient upgrade easier to justify.

Here’s the thing, though: there’s no need to obsess over every cent of energy you use, but it does pay to be strategic, aware, and intentional about when and where you’re using it.

Go through every contract and subscription

Yes, we know what you’re thinking – yawn! This is the most boring job on the list, but it’s often one of the most valuable. You’ll want to set aside an afternoon to go through your bank statements line by line. Look out for:

• Software and subscriptions: Are you paying for tools you’ve stopped using, or for two that do the same job?
• Suppliers: When did you last compare prices? Even if you’re happy with your supplier, a competing quote gives you something to negotiate with.
• Card fees: Alongside the surcharge ban, the RBA has lowered the caps on interchange fees, and it estimates around nine in ten small businesses will be better off. Check your merchant statement to make sure your payment provider is passing those savings on to you.
• Insurance, rubbish collection, phones and internet: These often roll over at higher rates without anyone noticing.

Check your council rates and land tax

If you own your premises, or your lease passes outgoings on to you, it’s worth making sure you’re not paying more than you should. Council rates and land tax are based on how your property is valued, and those valuations aren’t always right.

• Check your valuation: Compare it with similar properties nearby. If it looks too high, you can usually lodge an objection with your state’s Valuer-General, but there’s normally a deadline, so don’t leave it too long.
• Look for support: Some councils and states offer rates relief or hardship programs for small businesses, so it’s worth asking what’s available.

How to protect your profit margins as overheads keep rising

Rising business overheads aren’t going away any time soon, but that doesn’t mean your profit margins have to keep shrinking. You don’t need to tackle everything at once, either. We recommend focusing on one or two areas to start with, such as reviewing your roster or adjusting your prices, and building from there. A few hours saved each week, a slightly better margin on your bestsellers, and a little less waste can soon add up to real savings.

Here’s what’s important to remember: the small businesses that get through tough periods are usually the ones that know their numbers, spot problems early, and aren’t afraid to make small changes often. If you’re using a POS system, your sales and stock reports are a great place to start, as they’re already telling you most of what you need to know to reduce business costs and keep your margins healthy.