Article · short read

The Confounding Logic of Discounting

Jason Lemkin · SaaStr Free Intermediate

The pragmatic case for pricing so discounts are survivable instead of pretending you will hold the line: mark up by around 20 percent, automate the small predictable discounts, and model the procurement discount into big deals before they arrive.

  • Many enterprise buyers expect 10 to 20 percent off, then another cut once procurement gets involved.
  • On deals above 50K ACV, buyers wait for month or quarter end about 7 or 8 times out of 10.
  • Price enterprise 20 percent above the yield you actually model, then discount back to target (the Salesforce move).
  • Procurement staff are often bonused on getting at least X percent off the PO they receive.
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It answers 3 questions

  1. Buyers always ask for a discount. How much do I give, and how do I stop it eating my ARR?
  2. How do the best teams sell into large Indian and global enterprises where procurement runs the show?
  3. Procurement has entered the conversation and wants thirty percent off. How do I negotiate without gutting the deal?

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