Artificial Intelligence Podcast: ChatGPT, Claude, Midjourney and all other AI Tools

Can AI Lower Your Overhead With Larry Levine

• Jonathan Green : Artificial Intelligence Expert and Author of ChatGPT Profits • Episode 373

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Welcome to the Artificial Intelligence Podcast with Jonathan Green! In this episode, we delve into the art of cost reduction and its intersection with AI, featuring our special guest, Larry Levine, from P3 Cost Analysts. Larry has extensive experience in helping businesses reduce their indirect vendor overcharges, a crucial aspect often overlooked by many companies.

Larry introduces us to the concept of indirect vendor costs, which include expenses for telecom, utilities, waste, insurance, and property tax—costs that are often seen as non-negotiable. With a unique industry insights approach, Larry demonstrates how many of these costs can be negotiated down, sometimes by up to 75%, offering substantial savings for businesses.

Notable Quotes:

  • "It's really about discovering the right way to lower costs effectively, knowing what to ask for, and having the industry knowledge to back it up." - [Larry Levine]
  • "Every business, whether a startup or an established entity, should embrace the mindset that costs are negotiable." - [Larry Levine]
  • "AI might be the frontier, but cost efficiency is the foundation every business should secure." - [Jonathan Green]

Larry provides valuable insights into how businesses can maintain efficiency, especially in a tech-driven world where AI tools are rapidly embraced but not always cost-effective. He emphasizes the importance of having the right mindset when approaching vendors and the potential pitfalls of assuming costs are fixed.

Connect with Larry Levine:

If you're interested in learning how to optimize your business expenses while staying competitive with AI innovations, this episode is a must-listen! Tune in to discover how to streamline your costs and enhance your business operations.

Connect with Jonathan Green

Can AI lower your overhead? We're gonna find out what today's amazing special guest Larry Levine, Welcome to the Artificial Intelligence Podcast, where we make AI simple, practical, and accessible for small business owners and leaders. Forget the complicated T talk or expensive consultants. This is where you'll learn how to implement AI strategies that are easy to understand and can make a big impact for your business. The Artificial Intelligence Podcast is brought to you by fraction, a IO, the trusted partner for AI Digital transformation. At fraction a IO, we help small and medium sized businesses boost revenue by eliminating time wasting non-revenue generating tasks that frustrate your team. With our custom AI bots, tools and automations, we make it easy to shift your team's focus to the task. That matter most. Driving growth and results, we guide you through a smooth, seamless transition to ai, ensuring you avoid policy mistakes and invest in the tools that truly deliver value. Don't get left behind. Let fraction aio help you. Stay ahead in today's AI driven world. Learn more. Get started. Fraction aio.com. i'm so excited to have you here today, Larry, because having worked on a lot of projects I've worked in two different worlds. I come from the world of entrepreneurship, which is you don't spend money until you make it. And then I've also worked for startups where it's someone else's money. So you just spend like crazy, right? It's like government. It's government work. It's not our money, so let's spend it. So both ends of the spectrum. I'd love to start with just from at the beginning, your core mindset of what is cost reduction all about and what are like the first places to look for efficiencies. Just really big picture and how you got passionate or interested in this area. Sure. Thanks. Thanks for inviting me, Jonathan. So what is cost reduction? What is our cost reduction model? So we help businesses reduce their indirect vendor overcharges. That's a mouthful. So what is indirect vendor? So direct vendor first are those vendors specifically supply supplying parts and pieces to your top line product? If you're a restaurant, it's food. It's staff, it's chairs, it's tables. If you're an automobile manufacturer, it's metal, plastic, leather oil. But both of those businesses have indirect vendors they work with for their telecom, for their utilities, their waste, their insurance, their property tax, none of which. The end user takes direct advantage of, but is necessary to support the business. Most businesses take those charges from those vendors as as fixed costs, as non-negotiable. They take the rates from the telecom vendor, from the utility vendor, from the waste vendor, as non-negotiable. So some, in some cases, if the vendor's charging, you say, a thousand dollars a month for you to pick up your waste. Yeah. Some businesses think, can we reduce that by five or 10% down to $900 per month? And the waste vendor is more than usual, more than happy to be. To reduce it to $900 a month because their cost level is probably closer to three or $400. So they're still getting a large benefit from that large margin. So what do we do is we come in there, we have industry experts who've worked at the waste vendor, the telecom vendor, they're have insurance background. They've worked with property tax for years and we have supported about probably 12 categories. They know how to negotiate with these vendors. We've created a cost level benchmark database, which is geography specific Q SKU specific frequency specific waste bin size specific, and we're able to work with your vendors and negotiate those down. On average, 30 to 40%. In some cases as much as 75% on a contingency basis. So even if if we can't reduce it, it's for some reason you already have the best prices, you are able to negotiate it down, or they offered you the best rate out the door or the rates are fixed in your market. That's sometimes that's the case. There's no fee from us and you walk away with peace of mind that you weren't overspending. But if we do reduce your spend from, let's say it was from you, reduce it to $900, we reduce it to $500, saving you an additional $400. In that example, we'll share in that savings 50 50 for three years or five years. It's really interesting because like I said, I've seen so many people approach this is As, and they negotiate in certain areas and not in other areas. And this is very interesting. Sure. It's that is absolutely a mindset. And I seen that we. Especially when it's like there's a lot of excitement. People will jump in and it's not specifically indirect spending, but they're still jumping in on, actually, you know what it is indirect spending. As I think about it, it's sometimes they're buying a tool that doesn't directly affect their main product, but it's like helping backend, for example, some of the stuff in the AI space, it's AI note taking or AI summaries of your internal meetings. That doesn't affect the actual product. Or they're like trying to add track AI tracking tools and so they're jumping in all of these tools that are. Really expensive. And sometimes I see the enterprise prices and it's wild. It's oh, I gotta start charging these prices. And sometimes the markup, like I've seen some stuff, some tools, I don't wanna get too specific names, where the markup's 99%, right? So it's like it costs them a dollar, they charge a hundred and it's golly, that's some sweet margin. And what we're seeing a lot of now is this, we always have these cycles of excitement where people jump on all of these tools and what I'm interested in is the mindset of cost reduction is very interesting to me because every business kind of goes through a spending cycle and we need to cut back cycle, like growing and shrinking to get to efficiency. And I see a lot right now of this is a challenge a lot of my listeners face, which is where the board of directors tells the CEO, we need ai. And the CEO goes what do you mean? And they go, we don't know what we mean, but we know we want it. And it's and they, and then they go, what should it cost? And there's this idea that exp more expensive people is better and they buy these massive tools and the expensive software, and they go to the CTO goes, you have to use this. C two goes, don't need it, can't use it. He goes I already signed the contract, so you have to, you have to find a way to justify this so I don't get in trouble with the board. You go through that, and then not only do you have to use it, you now have to maintain it. There's an element of maintaining it, so now it's server costs or there's other costs, so I want to get into. And this is what I'm really passionate about. I'm really interested in your expertise, is this mindset of how can we be efficient from the beginning. So imagine someone is starting a new business. Before they sign all these contracts, what should they be thinking about? What causes people to just assume that the price for something and something are negotiable and or maybe how do you even know what's negotiable, not negotiable? Like I'd love to get into some of that mindset stuff or some of that. Great question. So you don't know, but we go into the, we're suggesting our clients go into the relationship with the mindset that it is negotiable and discover during the process maybe that it is not negotiable. One of my clients right now, I'll give you dozens of examples. One of my clients right now was being charged several hundred thousand dollars a year for the electricity. I don't wanna go too much into who they are, but they felt that was a lot of money and they was negotiating. They said, let's try to negotiate this. They were negotiating with a utility vendor for months to try to get it lowered, and they were unable to. It turns out they were in a fixed energy market and you can't. However, we got in there and discovered that their rate classification. Could be changed if you had the right words, if you had the insider knowledge to ask the right people inside to modify the rate. It turns out that this last month we reduced our electricity by over$10,000 for the month over the year. That's, it won't be a million dollars. It won't be a hundred thousand dollars for the year.'cause there are some lesser. There were just some cheaper months, but they went in with the right mindset but weren't able to do sometimes you go in with the right mindset, and you're with the intent to negotiate and you're able to negotiate. But what are you gonna negotiate to where, so you waste vendor may in fact, you may you may be in a fixed waste market. And the rate is the rate. But are you getting the right pickup frequency? Are you getting the right. Are you waiting for the bin to be full before you get it picked up? So there's more, there may be ways to modify it, but in general, go in and then with the mindset that it's negotiable and if it's not negotiable, it may still be negotiable 'cause you don't have necessarily the inside of knowledge to get it to negotiate down again from what to where. My very first client, we were able to negotiate his waste expenses down 76%. When we told him that, he said, I'm saved him some $6,000 per month across multiple sites. When we told him that, he said I don't look at my invoices. I just pay them. And in retrospect, and not on that phone call, but in retrospect, I asked what would you look for? Are you an industry insider? Do you know? Do you have your contract in front of you? Do you know what, waste invalid charges are contamination charges, fuel surcharges, COVID surcharges, still alternate drop off sites. You would, you know what to look for. And do you know what you would even negotiate down to?'cause you don't have that benchmark, that cost of a benchmark database. You know what, most businesses pay a lot of attention to the top line. You're building cars, you're serving you're serving food at your restaurant, you're building your widgets. You know what goes into that. You want, if you want to increase margins, you try to negotiate better rates with your supply vendors maybe better. Optimize your labor. And again take for granted that the other expenses, the telecom, utilities, waste insurance, your shipping expenses, your property tax expenses, your lease copiers. Those are the rates. The rates of the rates. And in fact, probably not. I saw something recently, which is that a large number of the generation younger than me. Can't even say hello on the phone. We have this, right? Like now people order a pizza by an app.'cause they're afraid to talk to someone on the phone. As though it's gonna become an awkward conversation is they're gonna, you don't sound smart enough to order a pizza. That's not gonna happen. But we have, so there's this fear of confrontation's now shifted into a fear of communication. So what's gonna happen? A lot of people's happen. What's gonna happen? That's what I, you don't get your pizza. They'll eventually figure out to get your pizza, you're not gonna make a doctor's appointment though. You'll get your doctor's appointment. You're not gonna lose your services. They're not gonna increase the price on you. What is happening is that we have this like now, there's like touchless delivery. Like you can order food, but you never have to see the person, which is so wild to me. It's oh my God, I saw a delivery person unclean. Like it's, that's what it feels like to me. It's so wild that you can't look,'cause you can't look the person. I give 'em a tip like what is going on? But I. For people that come from there who are like, I don't wanna get on the phone, I don't wanna talk to someone. How can they overcome that fear or exactly like you're saying, I think there's this fear of either social awkwardness or that like they're gonna charge you double for the pizza because now you've annoyed them. Or that something will happen. Like now they put a human, they put a human in as part of the interaction. You gotta pay the human. Yeah. And you just briefly, you reminded me, I saw a video recently. Of an AI tool making a reservation at a restaurant to another AI tool. I have you seen this video? I can send it to you. Oh yeah. No, I, they quickly discovered that they were both AI agents and went into ai, separate, AI language. Sounded like a modem talking, two modems talking to each other. So that's what it comes down to. So exactly that. It's that one of everyone says to me like, oh, we wanna have AI do all of our phone calls. I was like you lose so much, you lose the neon nuance, you lose the notification. Like the one thing I don't want AI to solve is communication. Like I don't want an AI to host my podcast. That's not very fun. There's, where's the value in that for anyone? No one wants to talk to an AI on the phone. No one wants to talk to AI customer support. How do you approach when you're approaching a negotiation? Is there, is it actually combative? Is it actually adversarial or is there a different mindset people can go to overcome? Just 'cause they're so afraid of talking to each other. I can't make it as a reservation. I need AI to do that, which I can handle that. That's too much for me. Like as much as I like technology, like I can. Order a pizza, which I didn't realize was an edge skill or an elite skill, but it's becoming that. So how can people approach it with the mindset of, this is a cooperative thing, or this person wants to work with me, I wanna work with them.'cause we've, what is, you've seen in the movie where you say to someone, I wanna lower price. They go, you know what, then we're not picking up your trash. There's this fear of that happening, which I don't think is very realistic, but let's talk through that a little bit. I think just get over yourself and make the phone call. If you're making a phone call for a dentist appointment, you make a phone call to a pizza, make a phone call to renegotiate your waste expenses. Are the vendors gonna be adversarial? Probably not, they may not be very cooperative. They may very well say, you're on the best rate, you're on the best phone plan. I can't do anything for you. And that may be true, if you don't have the inside or knowledge, you may not know what to say what records to ask for, to verify that. In fact, you are in fact on the best calling plan available. I'm not gonna give away too much about how we work. The most vendors know what we're attempting to do, and they're not adversarial, but they're not very cooperative either. And it is, it's I think in the long term there's gonna be more AI as part of that interaction, whether it's on our side and or their side. But today that is very much, mostly a human interact, human to human, but again, they're not. Some vendors are quick to do it because they know they have to, they're, they need to work on behalf of their client. They know they're, in most cases there's alternatives. If it's not waste vendor A wait, it's Waste Vendor B. If it's not at and t there's Verizon available. Utility companies, you really don't have much of a say with the utility company 'cause it's their wires. So they're gas pipes. In regulated markets and deregulated markets, they're happy to provide quotes because, they know. In all those circumstances, they know there's, there are other options available and they'd rather keep you at a lower rate than lose you to, to another vendor altogether. But more often than not, whether it's with us or with you a client directly, as I mentioned before, with that client with large client would be several hundred thousand dollars year electricity charges. They are slow to respond, especially if you don't know what to ask. Just get on the phone and ask. And if you don't know what to ask you, you'll eventually figure it out. If you have the time, mean you're probably spending a lot of time with your top line, with your restaurant, building your cars, building your widgets, and your staff may not have the time or experience to do it to make those phone calls. So that's where I'm not trying to sell our service necessarily, you do what you know to do. By way of example, if you, if your business has legal expenses, you call a lawyer you're not gonna go to court by yourself. If you need a bookkeeper, you hire a bookkeeper. If you have social media needs, you hire a social media agency. If you need to find a work your way through with what the landscape of AI is, you find somebody that's an expert in AI rather than spending hundreds of thousand dollars on the wrong tools. Which is, I think the example you were saying before some tools are easier than others. Less expensive than others, and more obvious the note taking tools. For example, I was reading an article, an example Yes. Last night of how some doctor's offices are moving from 15. Patients to as much as 45 patients per day. But they still have, because then, because of decreased reimbursement, they need that many more patients to be able to pay their own bills, but that has caused them to reduce the number of breaks. Increase the number of breaks from 15 breaks between clients to 45 breaks between clients, but the length of break has decreased and they can't spend their, there's their break is now less than two minutes per client, but they have five minutes of note taking. How do they do that with an AI note taking tool? So there's some places that it's very obvious to do that to implement an ai, but is it so obvious to implement AI on the sending or receiving out of a negotiation? We will see. I think one of the things that's interesting is that one of the lessons that I learned early on is it's a lot easier to save a dollar than make a dollar, but. As companies get larger, especially startups or outside investment are large amounts of money. There's so many moving parts. You're so busy, like you said, focusing on top line revenue. Oh, I just pay all the invoices that you don't realize. There was a recent case, I forget, it was where someone had sent it was to one of the big tech companies. It was Google or Facebook. They'd sent them hundreds of millions of dollars in fake invoices and they'd all been paid. Yeah, because and it's like it shouldn't work, but it does. Like you hear about those pretty often. So there is this mindset. Of, I'm just looking at the top, like I'm just looking at where we're going rather than reducing cost, but it's like generating sales is a lot harder, right? Every generating sale, generating customers selling a car is harder. Saving $10 per car, saving a hundred dollars per month, or a hundred dollars per day. So I think this is a really important mindset. I think that's why I wanted to have you on the show today is to really remind people that while AI is exciting and while technology is exciting, that every business has the same foundational needs. I use internet. We're using internet right now, right? Using power right now, using water right now. I went to the bathtub before the show. Like all these other expenses are part of it, and it's really important to put these things together and to realize that they're just as important. It's a lot easier to lower your overhead, and there are a lot more opportunities because usually when you just think it's oh, maybe I can get this one part a little bit cheaper. We often think the only way to get a discount is by ordering larger quantities, and it's yeah. And then you end up with 20,000 screws that when you'll need a thousand 'cause you're like, this is how much money I saved. It's is that how much money you saved or how much money you spent? Like you spent five times more than your budget. You have 9,000 extra screws. Yeah. So I could, another story. A 10 location, 20 location restaurant group. You have one financial analyst that is responsible for all the contracts. And all the bill paying, and certainly she's paying a lot of attention to the price of tomatoes across all these locations. And I don't know how much tomatoes cost and but she, if she feels it's expensive, she's paying a lot of time and attention to the tomato price. But just then just pays the a thousand dollars a month per site waste bill. There's a lot of margin there. But that's, she doesn't have the time because, she's being directed to pay attention to the tomatoes, to the rest of the menu. And that's true everywhere. It reminds you of that. Like no one cares about garbage collection until they go on strike. Exactly. And then suddenly the whole city care, it doesn't take that long. For everyone to notice when no one's picking up the trash. It only takes a couple of days and then you realize how important it's, and that's exactly it is that there are so many things I think it's so fascinating that we use as like tools and technologies and we don't think, and it's this, I think a lot of it is just, I don't, it's either I don't have time to look at it. I think there's a lot of, it's like I don't wanna get on the phone. And have 'em go. No, of course. There. You know what I mean? And it's like I, I found out this lesson early on when I was just like, even if you just say, is there a better rate? Am I on the right plan? Because there's people, I've seen people on, like their cell phone plan from 20 years ago. They've never changed it. And it's your plan doesn't include texting. Or they charge you a quarter. It used to be a quarter of text to send a text messages, which is insane now, but I remember that late nineties when it was like you got 10 text messages a month and you'd pay for minutes and it's so different. And if you don't change, they never get, they never tell you there's a better plan. So I'm coming into this conversation with the mindset that you should get the best rate possible, but that, that you may not need the best rate possible. You may be able with that 10%. Off the cost of waste may across your 50 sites, may turn out to be tens of thousands dollars, which is maybe very significant to you that, that's important. I, yeah, we may able to do better for you, but, ask that and we'll deal with the rest later. Yeah, I think that's really good. I think that's the lesson I'm taken from today is you should at least ask like the number I one of the lessons I learned, or one of my friends is because I'm in a business where you get paid a commission for referrals a lot. He goes, oh, I always ask if they'll gimme a higher commission. He. Yeah, he's sometimes they say no, but a lot of times they say yes. And I was like, what do you put in the message? He goes, that's the whole message. Can you gimme a higher rate? And the number of, and I'm the number of huge companies that have said yes to me is like wild.'cause you think they're the ones who are like, 'cause the person you're talking to doesn't care. They're not the owner of the company, bigger companies, it's just someone who's in an office. Someone they go, yeah, okay. The fear is that you may stop giving them referrals because it's not enough. I have a philosophy when I accept referrals, I pay commission. I'd rather take 75% of a deal than a hundred percent of no deal. So yeah that's probably true of the businesses you're working with. And that's all an email. If you just ask. And it's I was like, what? He goes, yeah, just, I go, how do you always have a higher commissioner? He goes, oh, I just ask. And I was like, I couldn't believe it. And that's such a critical lesson. Like how do you go, alright, just ask. And it's the such a good lesson. So for people who. Are like, oh my gosh, I would love to lower my bills, but I don't have time for it. Where's the best place they can find you? Connect. You see if maybe they're the right fit to work with you, Larry. Appreciate that. Thank you. So we're my business name I think you said in the beginning is P three cost analysts. Our website is cost analysts, A-N-A-L-Y-S-T s.com. You could watch our videos there. You could look for our landing pages. I have a landing page. I don't remember the ad, the website address of the landing page, or you can gimme a call 4 1 0 2 0 5. 2, 4, 7, 5. I'm also at LLevine@costanalysts.com, Don't worry everyone, I'll put that in the show notes and below the video on YouTube so it's easy to find. Larry, thank you such for being here for an amazing and intriguing episode of the Artificial Intelligence podcast. Thank you for listening to this week's episode of the Artificial Intelligence Podcast. Make sure to subscribe so you never miss another episode. 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