The discount was 15%. The gross margin was 40%.

A discount is not a pricing decision. It is a margin decision, taken in the last hour of a deal, by the person with the least reason to protect it.

By Steve 5 min read
Abstract bridge artwork for The discount was 15%. The gross margin was 40%.

Most businesses can tell you their list price and their gross margin. Far fewer can tell you the distribution of discounts granted last quarter, who granted them, and on what day of the month. Yet that distribution usually explains more about realised margin than any decision taken in the pricing review. The reason discounting escapes scrutiny is that it never feels like a pricing decision. It feels like a closing decision. The deal is nearly done, the buyer asks for something, and the cost of saying no appears to be…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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