A discount changes the economics of an agreement. Before approving it, identify what the business gives up and what, if anything, changes in return.
Volume, payment timing and a narrower scope can all affect the decision, but none should be assumed merely because a customer asks for a lower price.
Calculate the effect on contribution
Consider a simplified sale priced at $1,000 with $700 of variable cost. Its contribution before fixed costs is $300. A 10% price discount reduces revenue to $900; if variable cost stays unchanged, contribution falls to $200.
The $100 reduction is one-third of the original contribution. Under these assumptions, maintaining the same total contribution would require 50% more units, and the business would still need capacity to deliver them. This is an illustration, not a forecast.
Check the complete offer
Review payment terms, delivery obligations, support expectations and any additional conditions. A lower price combined with a more demanding scope can change the deal twice.
If the rationale is a larger order, distinguish a firm commitment from a possibility. If it is earlier payment, confirm the actual timing and the terms of the agreement.
Make exceptions visible
Define who may approve discounts and when a decision needs further review. Keep the reason so a temporary accommodation does not silently become the standard price.
Review patterns across deals. Frequent discount requests may reveal a positioning issue, a mismatch in scope or an offer that needs redesign.