Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

D. Use subsidies offered by third parties to reduce total rate:

While the company may pay the regular price to the vendor of the product, subsidies available in the market place may reduce this effective rate by offsetting part or all of the purchase price.

Use government sponsored programs

No.	Industry SIC	Year	Notes
1	0	2007	Lobbying and legislation has made it easier and cheaper for small companies to offer health insurance to their employees. Consumer-directed- plans have high deductibles that work with health savings accounts or health reimbursement arrangements. With an HRA, an employer can set aside money to help employees meet higher deductibles. The money spent is tax-deductible to the employer.
2	1521	2004	In an effort to encourage people to buy homes in otherwise unattractive urban markets, a non-profit consortium is developing home equity protection programs that allow home owners to hedge against a decline in property values in their area.
3	3674	1998	SEMATECH was formed in 1987 by 14 U.S. Semiconductor manufacturing firms that together accounted for more than 80 percent of U.S. Semiconductor manufacturing capacity, and was financed jointly by member firms and the federal government.
4	4724	1991	To avoid layoffs, Lois Lane got NY state to subsidize her payroll through a shared-work program. The employees must work fewer hours, but the state will make up the difference in their take-home pay for as long as 20 weeks.
5	5999	1986	Wometco stopped buying its vending machines and began leasing them from banks that owned the machines. The owners got the investment tax credits and rapid depreciation. Wometco got money on good terms.
6	6061	2004	Credit unions, because they're nonprofits, are able to offer lower rates and fees than banks. The average rate on a 4-year car loan is 4.68% at credit unions compared with 6.46% at banks. However, banking at a credit union has its drawbacks and most won't have a widespread branch or ATM network.
7	7372	2005	There are a total of 19 web based versions of federal tax prep and electronic filing programs available free through the IRS. Some of the sellers participating include Intuit Inc. maker of TurboTax and H&R Block maker of Tax Cut. All the free offers are for federal returns.

<<Return to Reduce the Rate of Cost