Purpose
Turn a description of a company's cost structure into a categorized, prioritized inventory of cost reduction opportunities across every major spend domain — each tagged by lever type and sized with a rough dollar-impact range — so finance and operations leaders can move from "we need to cut costs" to a defensible, ranked action list.
When to Use
Invoke this skill when the user asks to:
- Conduct a spend review or cost structure analysis
- Find ways to cut costs or improve margins
- Build a cost-out or cost reduction plan ahead of budget season
- Identify savings before a funding round, restructuring, or downturn
- Benchmark where a company is likely overspending relative to its operating model
- Prioritize which cost initiatives to pursue first by impact and difficulty
Inputs Required
Before starting, collect:
- Business model: What the company does, industry, and roughly how it makes money
- Company size: Headcount and annual revenue (or revenue range)
- Total cost base: Approximate annual operating spend, and any breakdown available (labor, COGS, overhead)
- Major spend categories: The largest known line items (payroll, rent, software, vendors, logistics, etc.)
- Constraints: Anything off the table — no layoffs, must keep certain vendors, contractual lock-ins
- Reduction target: Dollar or percentage goal, if one exists
- Timeline: How fast savings need to materialize (quick wins vs. structural)
If a detailed cost breakdown is unavailable, estimate typical spend proportions for the company's model and industry, and flag those estimates clearly.
Instructions
Step 1: Establish the Cost Baseline
Reconstruct a working view of where the money goes.
- Allocate total spend across the five domains (rough percentages if exact figures are missing): Labor, Procurement/Vendors, Overhead/G&A, Real Estate/Footprint, Process/Operational Efficiency
- Flag which domains are disproportionately large relative to typical benchmarks for the company's model
- Note the single largest line items — these carry the highest absolute savings potential
Step 2: Scan Each Domain for Opportunities
Work through all five domains. For each, identify concrete opportunities and tag every one with a lever type:
- Eliminate — remove the cost entirely (cut unused software, kill low-ROI programs)
- Reduce — spend less on the same thing (renegotiate rates, downgrade tiers, cut volume)
- Restructure — change how the cost is incurred (offshore, outsource, shift fixed to variable)
- Automate — replace manual cost with tooling or systemization
Domain 1 — Labor
- Overtime and contractor spend that could be insourced or reduced
- Span-of-control issues (too many layers, low manager-to-IC ratios)
- Roles duplicated across teams or made redundant by tooling
- Offshoring/nearshoring for non-customer-facing functions
- Attrition-based savings (freeze backfills on low-leverage roles)
Domain 2 — Procurement/Vendors
- Redundant or overlapping software subscriptions (SaaS sprawl)
- Contracts up for renewal — leverage for renegotiation
- Single-source dependencies where competitive bidding could lower price
- Consumption-based services being over-provisioned (cloud, licenses per seat)
- Volume consolidation across fragmented purchasing
Domain 3 — Overhead/G&A
- Discretionary spend (travel, events, subscriptions, perks)
- Professional services that could be brought in-house or scoped down
- Insurance, banking, and financing terms overdue for review
- Low-utilization tools and services with recurring fees
Domain 4 — Real Estate/Footprint
- Underutilized office or facility space (post-hybrid downsizing)
- Sublease or consolidation opportunities
- Energy, utilities, and facility service contract review
- Warehouse/logistics footprint efficiency
Domain 5 — Process/Operational Efficiency
- Manual workflows with high labor cost that could be automated
- Rework, waste, and quality-driven cost (defect rates, returns)
- Approval and cycle-time bottlenecks tying up capital
- Inventory carrying costs and working capital inefficiency
Step 3: Size the Impact
For each opportunity, estimate a rough annual savings range as a dollar band (e.g., $40K–$80K) or as a percentage of the relevant line item. Use conservative and aggressive ends. State the assumption behind each estimate. Do not present false precision — ranges signal these are directional, not audited.
Step 4: Assess Implementation Difficulty
Tag each opportunity:
- Difficulty: Low / Medium / High (effort, complexity, organizational resistance)
- Time to realize: Quick win (<90 days) / Medium (3–9 months) / Structural (9+ months)
- Risk: Any downside — customer impact, morale, capability loss
Step 5: Prioritize
Build a ranked action list. Rank by expected value adjusted for difficulty and risk — favoring high-impact, low-difficulty items at the top. Separate quick wins from structural plays. Respect all constraints provided (e.g., if layoffs are off the table, exclude them).
Step 6: Summarize Total Opportunity
Present the aggregate savings range across all opportunities, note what percentage of the cost base it represents, and compare against the stated reduction target if one was given.
Output Format
- Structure: Baseline summary → opportunities organized by the five domains → ranked priority list → total opportunity summary
- Length: 1,000–1,400 words
- Format: Structured document — opportunities presented as a table (Opportunity / Domain / Lever / Savings Range / Difficulty / Time to Realize) with a ranked list following
- Sections: Cost Baseline → Labor → Procurement → Overhead/G&A → Footprint → Process Efficiency → Ranked Priority List → Total Opportunity Summary
- Tone: CFO-caliber — analytical, direct, defensible; ranges over false precision; no optimism inflation
Quality Checklist
Before delivering output, verify:
- [ ] All five spend domains are covered with at least two opportunities each
- [ ] Every opportunity is tagged with one of the four lever types (eliminate/reduce/restructure/automate)
- [ ] Every opportunity has a savings range with a stated assumption — no single-point figures presented as certain
- [ ] Every opportunity has a difficulty rating and time-to-realize tag
- [ ] The priority list is ranked by impact-adjusted-for-difficulty — not by domain order
- [ ] All stated constraints are respected (nothing recommended that was ruled out)
- [ ] Total opportunity is aggregated and compared against the reduction target when one was provided
Notes
- The largest savings almost always live in the two biggest line items — pressure-test labor and procurement hardest before chasing small overhead wins
- Quick wins (SaaS consolidation, discretionary spend, contract renegotiation) build credibility and fund the harder structural work
- Restructure and automate levers deliver the most durable savings but carry the longest payback — sequence them behind quick wins in the roadmap
- When cost data is thin, lead with the estimate but label it clearly; a directional map is more useful than no map, provided the assumptions are visible
How to use this skill
This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.
Installing in Claude Code:
~/.claude/skills/<folder-name>/SKILL.md— auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)<your-project>/.claude/skills/<folder-name>/SKILL.md— auto-loads only when working in that project (recommended for project-specific skills)
Restart Claude Code or open a new session to register.
Using in Claude.ai, ChatGPT, Gemini, or other AI tools:
- Drag this file into a new chat, or copy and paste its contents
- Send your task or request as your next message — the AI will apply the skill where it fits
For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills