Why I Don’t Like Discounts

Let’s start with the point I want to make – if you discount your product or service, all you’re doing is telling your prospect it isn’t worth whatever you’re asking for it.

I don’t like discounts or discounting. It’s a game whereby both seller and buyer know the list price is BS. It’s a game where often the greater fool looses in the deal.

I grew up in B2B sales. More specific, I grew up in B2B telecom equipment sales – a complex sales environment with long sales cycles and big commissions. And a bogus price list.

Everyone knew our price list was nothing more than an artificial starting point to arrive at the price we were really willing to sell our products and services. The name of the game is discounts. Often arbitrary, we discounted to whatever level we thought necessary to win. Sure, we had guidelines on minimum margins and volume, but everything was ultimately arbitrary.

Sounds okay, but from a business perspective I don’t like it.

Sales people invariably wanted to add more discount to every deal. If the competition got tough, the request would launch forward to take another 5-10% off to close the deal. Even though a salesperson makes less money as the discount increases, the requests for greater discounts always came.

Before I get off track talking about sales, let’s come back to the point I want to make.

Your list price should mean something. Premiums, promotions, specials, and programs are okay – they’re one-offs tied to time or performance. But discounts are nothing more than admission of a lie in terms of the price you ask for your goods or services.

What do you think? Are discounts okay? Do you have a different opinion as a consumer as you do as a business owner or manager?

David Lee

David Lee

David is a serial entrepreneur, advisor, and investor. He has built and exited successful businesses and is now focused on investing. He holds a master's in business administration from the University of California, Berkeley.