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In this video tutorial, Simon demonstrates how to reduce the size of Excel files as the data added and complexity increases. Excel file sizes can range from a few kilobytes to megabytes, which can slow down the system and make sharing difficult. To reduce file size, one method is saving the Excel file as a binary spreadsheet. This can be done by navigating to File, clicking on Save As, entering a file name and location, selecting the Excel binary workbook option, and clicking Save.