Protecting your upside when discounting

Deciding whether to offer a discount – and how much – requires careful balance. For smaller deals, it’s often best to hold firm on pricing, but with larger enterprise sales, negotiation becomes inevitable.

When selling to IT – a sophisticated buyer with significant leverage – expect end-of-month and end-of-quarter deal rushes. This is simply part of the process. However, with the right tools to manage complex subscriptions, you can safeguard your revenue potential. Here are some strategies:

Automated quote-to-cash processes: CPQ (Configure, Price, Quote) tools can prevent excessive discounting by salespeople through approval workflows triggered at specific discount thresholds or for certain SKUs. Keep in mind that it’s not just salespeople who over-discount — managers are often culprits too.

Annual uplifts: If a customer demands a steep discount, build in annual price increases to gradually align their cost with your list price over time.

Ramp deals for growth: When a customer projects aggressive growth – say, buying 1,000 users today but seeking a discount based on an expected 3,000 users in three years – structure a three-year ramp deal with committed milestones to protect your pricing.

Feature-specific pricing: If a customer wants your Large plan for just one feature but only agrees to pay Medium plan rates, don’t cave. Instead, offer a subscription for the Medium plan plus that feature as an add-on. This preserves the opportunity to upsell the Large plan later.

Finally, after a year or two in business, renewals will dominate your deal flow. For significant contracts, these are prime opportunities to meet with customers, discuss your product roadmap, sell additional features, and secure longer commitments.