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 power, and plenty of small businesses are feeling the squeeze.

If that sounds familiar, you’re far from alone. MYOB’s Annual Business Monitor found that small businesses’ overheads have gone up by an average of $1,200 a month over the past year, while combined insurance premiums have risen by around $1,800. And according to Stats NZ figures, business input costs rose 2.9% in the June 2026 quarter, while the prices businesses could charge rose by just 1.6%.

So here’s the thing: you can’t control the minimum wage or what your power company 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 KiwiSaver: The adult minimum wage rose to $23.95 an hour on 1 April 2026, and the minimum employer KiwiSaver contribution went up from 3% to 3.5%, rising again to 4% in 2028. Employers now also have to contribute for KiwiSaver members aged 16 and 17.
• Energy: Power has been one of the biggest jumps. Stats NZ figures showed electricity sold to businesses rose 21.8% in the June 2026 quarter alone, and fixed lines charges have been a big part of recent increases.
• Insurance: Premiums have kept climbing, and medium-sized businesses have been hit especially hard.
• Everything else: Rent, fuel, 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 guide to POS reports explains what to look for. 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, so a happy, settled team is one of the best ways to keep labour costs down.

It’s also worth checking your payroll is set up correctly for the new KiwiSaver rate, especially if you employ any 16 or 17-year-olds. A quick chat with your accountant can help you plan for the next increase in 2028, too.

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.
• 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 till explaining that your costs have gone up goes a long way. Most customers understand, and they’ll appreciate you being honest with them.
• Plan for the surcharge ban: The government is banning surcharges on most in-store EFTPOS, Visa and Mastercard payments. If you currently add a surcharge, make sure your prices will cover your card fees once you can’t.

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 simplifying 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:

• Shop around: With business power prices rising so quickly, it’s worth comparing plans. Even if you’re happy with your retailer, a better quote elsewhere gives you something to negotiate with.
• 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.
• Look for support: EECA has advice and programmes to help businesses use energy more efficiently, and it’s a good place to start if you’re thinking about upgrading old, power-hungry equipment.

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: Interchange fee caps on in-store card payments were lowered in December 2025, so 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 bill

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 are based on your property’s rating valuation, and those valuations aren’t always right.

• Check your valuation: Compare it with similar properties nearby. If it looks too high, you can usually object to your council’s rating valuation, but there’s normally a deadline after new valuations come out, so don’t leave it too long.
• Look for support: Some councils offer rates remissions or payment plans for businesses facing hardship, so it’s worth asking yours 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.