The discount that lost a ready buyer: does offering a discount hurt sales?
A discount offered to someone who already said yes reads as doubt. And doubt is contagious.
I learned that from an email I got at 8:30 in the morning on February 18. A prospect who had been on our show, who we had met with two days earlier, who was ready to close, wrote back after we offered him 30% off. I read it out loud on a call a few hours later:
He said, honestly, you had me. But since you guys don't believe in the value, why should I?
So yes, offering a discount can hurt sales. Not always, not in every negotiation. But a discount offered at the wrong moment, to the wrong person, for no reason they asked for, can kill a deal that was already won.
Sold, then unsold by 30% off
Here is what actually happened. He was sold. We were trying to be generous, or trying to speed things up, or both. We put a 30% discount on the table that he never asked for.
His reaction, as I paraphrased it on the call: you guys are offering me a 30% discount. Why? I'm ready to buy.
That is the whole lesson in two sentences. He did not hear "we like you." He heard "we are not sure this is worth what we said it was worth." A buyer who was confident a minute ago now has a new question, and the question is about you.
Why a discount after a yes reads as doubt
Price is a claim. When you name a number, you are saying this is what it is worth. When you cut that number before anyone pushed back, you are withdrawing the claim.
Three things happen in the buyer's head.
- They wonder what else you overstated. If the price was soft, maybe the results are soft too.
- They wonder who is paying full price. Probably nobody, which means the list price was theater.
- They anchor on the new number forever. Salesforce makes the point bluntly: a discount sets an expectation about price for future engagements with that customer. Give 10% once and they will always expect 10%.
And the discount usually does not buy you anything. Tech.co reported studies by the Technology Services Industry Association with Value and Pricing Partners that found high discounts have little impact on close rates and often correlate with lower profitability. You give away margin and do not get the speed you were paying for.
The other side: pilots on the back of an LOI, not freebies
The call where I read that email was with a fintech founder who sells into banks. He had been pushing us, politely, to offer more performance-based terms. Then I showed him the email and he made the sharpest distinction of the day.
His company does not give the product away. When they work with a large bank, they get a non-binding letter of intent first, and then run a pilot of about two months. The LOI is a signal of commitment. The pilot is a test with skin in the game on both sides. In his words:
You cannot raise if you keep selling stuff for free.
That is the difference between a concession and a structure. A random discount is a concession. A pilot tied to a signed signal is a structure. One says we are unsure. The other says we are so sure we will prove it, as long as you commit to looking.
Someone on the call put the filter even more cleanly: you do not want to offer a no-brainer to a low-brainer. The best offer goes to people who will actually do the work with you, not to people who will sit back and wait for you to build the world for them.
Our rule: discount only in negotiation, 10 to 20% max
Two hours after that call we had our weekly pipeline review with Charles. The board told the story. 313 accounts sitting in the meeting stage. Fifteen in negotiation. The temptation with a backlog like that is to grease everything with a discount and hope it moves.
We wrote the opposite down as a rule.
- Early in the deal, sell value and scarcity. Our calendar is full, our capacity is real, and we say so.
- No discounts before negotiation. If nobody has pushed on price, nobody gets a lower price.
- In negotiation, discount only in exchange for something, and cap it at 10 to 20%.
The cap matters as much as the timing. Past 20% you are not negotiating, you are repricing. If you need to cut more than that to close, the problem is fit or value, not price.
What to offer instead of a discount
When a buyer hesitates, there is almost always something better to give than money off.
A pilot with a commitment attached. The fintech founder's model: a signed signal, a short window, a clear success test.
Risk reversal with skin in the game. Around the same time, Charles had just launched a trial that only charges once we have delivered ten replies or 14 days have passed, with a card on file. The buyer is protected. We are still paid properly when it works. Nobody is pretending the work is worth less.
Scope instead of price. Do less for the same rate per unit, or start with one campaign instead of three. The number per unit stays honest.
Speed. Sometimes what they want is not cheaper, it is sooner. Start Monday is often worth more to a buyer than 15% off.
And sometimes the answer is to do nothing. If they said yes, take the yes. Send the agreement. Get out of the way.
If you want to know what your offer is actually worth before you start cutting it, run the numbers on what one closed deal is worth to you and what a meeting costs. Run your numbers.
Frequently asked questions
When is a discount the right move?
In negotiation, after the buyer has raised price, and only in exchange for something: a longer commitment, a case study, faster payment. Keep it to 10 to 20% at most.
Does a discount lower perceived value?
It can. An unrequested discount tells a ready buyer the list price was not real, and it sets the price they will expect next time.
Is a free pilot better than a discount?
A pilot tied to a signed signal such as a non-binding LOI is better than either. Pure freebies attract people with no skin in the game.
How big should a negotiation discount be?
Our cap is 10 to 20%. If you need more than that to close, the problem is usually fit or value, not price.