Cost Waterfall (Cost Reduction Levers)
Reference model
The cost waterfall shows how each initiative contributes to the overall cost reduction.
About this model
A method to illustrate the sequential impact of cost reduction initiatives on total costs, often displayed in a waterfall format.
Originator not stated.
How to read it
- Start from the total cost and move downwards through each cost reduction lever.
- Each step shows the remaining cost after applying the corresponding reduction.
What this does
Visualizes how costs change over time, showing the impact of various cost reduction initiatives and helping identify areas for further savings.
When to use it
Use it when analyzing cost structures to understand how different levers impact overall costs and to prioritize cost reduction efforts.
Not when: Do not use it when costs are not clearly defined or when there are no specific cost reduction initiatives to assess.
What happens next
Consider using a detailed cost-benefit analysis for the top cost reduction initiatives identified.
Golden thread
Builds on ←
- Cost structure analysis
- Cost reduction initiatives
Feeds into →
- Cost-benefit analysis
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Drafted with AI and reviewed by Eccellere on 04/11/2026. Guidance, not advice: apply your own judgement.