Dear Growth Guru,
We are a fast-growing UK enterprise software provider, and we’re facing a brutal issue: our sales team keeps discounting to get deals over the line.
Every time a prospect pushes back on price or asks for a proposal revision, our account executives immediately panic and shave 15% to 20% off the annual contract value just to hit their quarterly targets.
It is ruining our profit margins, devaluing our product in the market, and training our buyers to expect cheap rates. How do we break this discounting habit and train our team to defend our value?
Margin-Eroded in Manchester
Dear Margin-Eroded,
Discounting is an addictive drug for sales teams. It offers a quick dopamine hit of a signed contract, but it leaves your business with a severe hangover of eroded margins and uncommitted customers.
When account executives reach for a discount at the first sign of friction, it usually means one thing: they failed to build enough quantifiable value during discovery. If a buyer views your software as a commodity, price becomes the only lever left to pull.
Here is how you break the cycle and force your team to defend your price point:
Institute a “Give-to-Get” Rule: Never give away a price reduction for free. If a prospect demands a 10% discount, your team must remove a feature tier, shorten payment terms, or request a multi-year commitment in return. When concessions cost the buyer something, price requests drop dramatically.
Quantify the Cost of Inaction (COI): Teach your sellers to calculate what staying with the status quo costs the prospect each month. If your software saves them £15,000 a month in wasted labour, a £2,000 monthly subscription is an obvious bargain. Make the cost of doing nothing far scarier than your price tag.
Cap AE Discount Authority: Require executive sign-off for any discount above 5%. When sellers know they must justify price cuts directly to the Managing Director or CFO, they miraculously find creative ways to demonstrate value instead.
Price is only an issue in the absence of value. Help your team build a stronger business case upfront, and you will watch your margins recover overnight.
