The Discounting Trap

Why that "small" discount might be your most expensive decision.

"Sure, it's only 1%. It's not that much."

I hear this all the time. And I get it. You want to close the sale. Your customer is pushing back so a small discount can feel like a fair compromise.

But here's the thing: that 1% comes straight off your net profit.

In a business selling €5 million in sales per year, that "small" discount is costing you €50,000 a year and I'm sure there are lots of areas in your business you can think of right now that would benefit from €50,000.

How It Creeps In

Discounting rarely starts as a plan. It starts as a one-off.

A good customer asks for a better price. You say yes. Then another customer gets wind of it. Then a salesperson offers it to get a sale across the line. Then it just becomes "the way we do things."

I was working with a client recently where discounting had grown bit by bit over three years. When we totalled it up, they couldn't believe it.

And when we dug in, we found the usual culprits:

• Different salespeople giving different discounts with no real reason for the gap

• One-off discounts from years ago still sitting on customer accounts

• No clear rules on when to discount

• Early payment discounts being given even though cash flow was fine

None of these looked like a big deal on their own. But add them up, and there was serious money leaking out every month.

Why It Becomes a Habit

Discounting works in the short term. The customer says yes. The sale closes. Everyone's happy.

But the cost doesn't show up anywhere obvious. It just chips away at your margin, month after month, until you look at your profit at the end of the year and think "where did it all go?"

And once you give a discount, it becomes the new normal. Getting back to full price feels like putting prices up.

What You Can Do

If discounting has crept up in your business:

1. Work out the real number - not a guess, the actual figure

2. Track it monthly - if you can see it, you can manage it

3. Set some ground rules - when discounts make sense and when they don't

4. Help your team sell on value - so price becomes less of a battle

5. Check old customer accounts - you might find money sitting there waiting to be reclaimed

One Thing to Think About

If you're not keeping a close eye on discounting, you're probably giving money away every day without realising it.

What is discounting actually costing your business this year?

Want to find the other leaks?

I've put together a free guide showing the Top 10 Business Leaks I see in 7-figure businesses and how to spot them.

Download here