Guident Newsletter – September 2017 – Issue 17

By the numbers; “Where do Discounts come from, revenues or profit?” Many of my clients have sales staff and pay sales commission on “top line” revenues. I often get the question regarding my opinion on offering a “discount” to close the deal. I usually give The Boss a typical consultant’s answer like, “It depends.” I begin the discussion by asking The Boss where the discount is coming from. They look at me with a somewhat puzzled look and ask, “What are you talking about?” Most of the business owners I work with see discounts coming solely off of “top line” revenues. For example, they may have a $10,000 proposal that is in a competitive situation and their sales person believes they need to discount the job in order to get the work. Together they may believe a $1,000 discount is necessary to “close the deal”. A 10% reduction in price to get the job and reach their revenue goals, keep their people working, and possibly steal a competitor’s customer is acceptable in their minds. It very well may be but we need to understand the full impact of the discount as it pertains to net profit not just “top line” […]