The discount cost the seller 10% of commission. It cost you 25% of the profit.

Discount authority is usually delegated to the person least exposed to its consequences, and the arithmetic of that gap is steeper than most sales plans assume.

By Steve 5 min read
Abstract bridge artwork for The discount cost the seller 10% of commission. It cost you 25% of the profit.

A salesperson takes 10% off a £100,000 deal to get it signed before month end. On a 5%-of-revenue commission plan, their earnings on that deal drop from £5,000 to £4,500. They have given up £500. If the work carries a 40% gross margin, the business has given up £10,000 of price against £60,000 of unchanged cost: contribution falls from £40,000 to £30,000, a quarter of the profit on the job. Both parties made a 10% price concession. One of them absorbed a 10% hit, the other a 25% hit. Nobody…

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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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