Pricing with Confidence, 2nd Edition

CHAPTER 3Rule Three

Kick the Discounting Habit

Discounting is a habit entrenched in many organizations. While discounting is a tool that pricers deploy, habitual discounting sub-optimizes customer relationships and leaves money on the table. In many cases, discounting turns into an addiction. Discounts are simple and deliver short-term KPIs. Once an organization falls into the discounting addiction, the battle is lost even before the negotiation begins. The best way to dislodge any deep-rooted attitude is to replace it with another. Backbone signals to the entire sales team that a new confidence and exciting new tools are in place to kick the discounting habit.

The dangers of rash discounting show up in even the most basic analytics: customer plots, win loss reviews, and customer profitability analysis. It becomes cultural in organizations, and sellers rely on it as their crutch for closing business. If you have a culture of discounting, your customers know it and will not trust any proposal you offer. This is what led us to Rule Three: Kick the Discounting Habit.

Successful commercial teams invest the time to understand how they create value for customers and know how to engage in value conversations. The best companies know they have to display just a little arrogance about the value they offer in order to send an important signal to potential buyers. That signal is: We are confident in the value we provide and, therefore, the prices we charge. Moreover, kicking the discounting ...