A type of cost savings that constitute net reductions in an entity’s costs or expenses that can be attained, usually through a number of methods or in multiple cost reduction areas, such the cost of raw materials and processes. Other potential areas include reduction or elimination of waste and redundancies, etc. Bottom line savings are reflected in (as part of) the net amount of income over expenses for an entity. In other words, it is the final results that can be presented for a specific period of time such as a fiscal year.

Such costs savings appear at the “bottom line”- i.e., the very bottom of the ledger, and hence the name. Bottom line savings can be used in a variety of ways, including investing in new production methods, new technology, research and development, expansion, etc. Lower costs, in addition to higher revenues, are key factors in the assessment of projects for the purpose of investment. Other types of relevant costs include realized cost savings and cost avoidance savings.

In order to attain and maximize bottom line savings, it is essential that an entity pinpoint potential areas of cost savings. Once these areas have been identified, changes to operations and existing methods can be deployed to that end.