Discount schedule
DIS-kownt SKEJ-ool
A structured framework defining what discounts sales can offer and under what conditions. Prevents rogue discounting.
A discount schedule is a set of rules that govern what discounts your sales team can offer. It specifies maximum discount percentages by deal size, deal type, and commitment length. Without one, every sales rep invents their own discounting strategy, and margins erode.
A typical discount schedule looks like this: 10% for annual prepay, 15% for two-year contracts, 20% for three-year contracts. Additional 5% for deals over $100k. Maximum discount of 25% requires VP approval. Anything above 30% requires CEO approval. These rails prevent a sales rep from giving away 50% to close a deal.
Discount schedules also protect deal quality. Deep discounts attract price-sensitive customers who churn at higher rates. If you consistently discount 40%+ to close deals, your pricing is wrong, not your discounting.
Examples
A sales team implements a discount schedule.
A SaaS company publishes internal discount rules: up to 10% for annual commitment (AE can approve), up to 20% for 2+ year commitment or 200+ seats (manager approval), up to 30% for strategic accounts (VP approval). No discount above 30% without CEO sign-off. Clear rules, clear escalation.
A discount schedule prevents margin erosion.
Before implementing a discount schedule, a company's average discount was 28%. Top AEs averaged 15% while struggling AEs averaged 40%. After the schedule, average discount dropped to 18%. Revenue per deal increased. The struggling AEs either improved their selling skills or found the right tier for each customer.
Volume discounts in a discount schedule.
A monitoring tool's discount schedule: 1-49 hosts at list price, 50-199 hosts at 10% off, 200-499 hosts at 15% off, 500+ hosts at 20% off. This is published to customers as volume pricing, not discounting. Customers see a transparent price break, not a negotiation.
In practice
Read more on the blog
Frequently asked questions
What is a healthy average discount rate?
10-20% of list price for enterprise SaaS. If your average discount is above 25%, either your list price is too high or your sales team is using discounts as a crutch instead of selling value. Track discount rates by rep, deal size, and segment to identify patterns.
Should I ever offer zero discount?
Absolutely. Self-serve customers should pay list price. Small deals under $10k/year should rarely get discounts. Reserve discounts for large, multi-year commitments where the locked-in revenue justifies the margin reduction. Many developers prefer transparent pricing with no negotiation over the discount dance.
Related terms
Custom pricing for large organizations, typically requiring a sales conversation. The "Contact us" plan on your pricing page.
The annualized value of a single customer contract. Tells you about individual deal size, while ASP tells you the average across all deals.
A cross-functional team that reviews and approves non-standard deal terms, pricing, and contract structures.
How you bundle features into plans and tiers. Which features go in which plan at which price. The architecture of your pricing page.
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