Understand the true lifetime cost of discounting and discover better alternatives that preserve value
A discount today isn't a one-time cost - it compounds every year the customer stays. See how discount debt accumulates over time.
This $10,000 discount costs you $50,000 over the customer lifetime. Discounts aren't one-time - they're forever. Even expansion revenue builds on the discounted base.
Discounts don't just reduce revenue - they destroy LTV, worsen unit economics, increase churn, and lower company valuation.
This discount reduces your company valuation by $80,000 (lost ARR × multiple). Every dollar discounted costs your company 8x in enterprise value.
Instead of cutting price, offer these alternatives. They cost you less but feel more valuable to customers.
| Alternative | Your Cost | Perceived Value | Win Rate Lift | Best For |
|---|---|---|---|---|
| Annual Prepay (3% off) | -$1,500 | ~$7,500 | +10% | Cash flow sensitive buyers |
| 3-Year Commit (8% off) | -$12,000 | Revenue lock-in | +15% | Enterprise deals |
| 6-Month Payment Terms | ~$500 (float) | ~$5,000 | +8% | Budget constrained |
| Free Onboarding | $2,500 | $10,000 | +12% | First-time buyers |
| Extra Seats at Same Price | Marginal | Expansion opportunity | +5% | Growing teams |
| Premium Support ($3k value) | $1,500 | $8,000 | +10% | Complex deployments |
Instead of a 20% discount, offer annual prepay (3% off) + free onboarding. This costs you $4,000 instead of $10,000, but feels like more value to the customer. You save $6,000 and preserve pricing integrity.
Is it worth discounting to close faster? Compare different scenarios to understand the time vs. price trade-off.
A 10% discount to close 30 days faster is optimal - you close 4 deals per year instead of 3, offsetting the discount. But 20% for 45 days faster destroys too much value.