Differences Between Cost Control and Cost Reduction

At first glance both cost control and cost reduction looks as if they refer to same thing, however there are many differences between cost control and cost reduction, let’s look at some of them –

1. While cost control refers to something which is decided in advance like maintaining the cost of a product to a certain level is called cost control, while cost reduction is something which is decided after wards so for example reducing the salary of employees when company decides to cut its cost can be defined as cost reduction.

2. Cost control is therefore a sort of preventive action because it is done in order to prevent the expenditure of the company and cost reduction is more of a corrective action because it is done after the company has realized that it has making more expenditure than required.

3. Cost control is different for different process of a product, so for one process there may cost control and for other there may no cost control while cost reduction is uniform throughout the company.

4. While the emphasis of cost control is on past and present while the emphasis of cost reduction is more on future rather than on past or present.

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