Definition
A discount is a price reduction used to drive conversion, retention, or commitment.
Why it matters
Discounts can grow revenue and reduce churn, but they also reduce margin and can reset customer expectations.
Pricing implications
Use discounts intentionally and track their impact on LTV and payback. Avoid blanket discounts without segmentation.
Measurement tips
Track discount rates by segment and sales channel.
Checklist
- Define who is eligible for discounts.
- Set discount limits and approvals.
- Track discount impact on margin and churn.
- Avoid stacking multiple discounts without approval.
- Use discounts to drive commitment, not to mask value gaps.
- Compare discounted vs list price conversion.
- Re-evaluate discount strategy quarterly.
- Keep discount terms clear in contracts.