The Hidden Cost of Discounts | How Much Is Your Sales Strategy Costing You?

"Discounting isn't a failure, it's a signal. It's pointing to the places in your pricing, narrative, discovery, and money mindset where there is gold to be unearthed, Follow that signpost of curiosity ."

-Michelle Terpstra

Are you relying on discounts to close deals? If so, you might be unknowingly undermining your revenue, eroding your brand’s value, and training buyers to wait for sales, rather than valuing your product. In this post, we’ll explore why discounting is the most expensive mistake in sales, the psychology behind it, and practical strategies to confidently hold your pricing without resorting to slashing prices.

What you’ll learn:

Why discounting damages your revenue and trust

How to replace discounts with value-driven tactics

The importance of discovery and timing in closing high-value deals

Practical “rascal fixes” to maintain margins and build loyalty

This article distills expert insights, including data-backed findings from ProfitWell and real-world examples, to help you stop the discounting spiral and position your offerings as premium and sustainable.

The Hidden Costs of Discounting in Sales: How to Close Deals Without Sacrificing Revenue

The Hidden Cost of Discounting: More Than Just Slashed Prices

Why is discounting considered the most expensive mistake in sales? According to ProfitWell, every 1% decrease in price can result in up to an 11% decline in long-term revenue. Think about that, one small discount can wipe out years of profit growth.

For example, a 20% discount might seem like a quick win, but it could cost your company 200% in lifetime customer value. That’s because discounts train your buyers to expect lower prices, delay their purchasing decisions, and churn faster after the deal closes.

Fact check: Customers acquired through heavy discounting tend to churn twice as fast as full-price customers. Plus, these discounted buyers often become less loyal and less likely to recommend your brand, eroding your reputation and future revenue.

Why Salespeople Fall into the Discount Trap

So, why are so many sales reps and leaders hooked on discounting? It’s often a symptom of weak sales foundations, which means poor training, unclear value narratives, or underdeveloped product positioning. When reps feel uncertain or lack confidence, they default to discounting as a safety net.

Key insight: Discounting is a signal, not a failure. It indicates gaps in discovery, understanding buyer pain, or articulating your value clearly. When sales teams haven’t been equipped with solid training, proof testimonials, or a crisp narrative, they view discounts as the only way to close. Michelle recounts her early days at Thomson Reuters, where rigorous sales training and understanding competitive landscaping gave her the confidence to close deals without slashing prices. Without that foundation, she admits she would have easily fallen into the discounting trap.

How to Break Free from the Discounting Cycle

Build Confidence Through Deep Discovery

Deals are won and lost in discovery. When you ask deep, curiosity-driven questions, you uncover the real problems, motivations, and outcomes that matter to your prospects. Instead of pushing for a quick close, focus on understanding their pain points and future vision.

Example: Instead of just asking, “Are you interested in buying?” ask, “What happens if this problem isn’t solved next quarter? How does that impact your team and your goals?” This creates emotional urgency, not just price pressure.

Pro Tip: Dig deep into timing, decision cycles, and organizational priorities, these insights help you frame your solution around outcomes, not features.

Use Value-Driven Fixes Instead of Discounts

Offer additional value: Customized onboarding, strategy sessions, or extra support can be more compelling than a price reduction.

Create timing urgency: Anchor the sale to specific deadlines or outcomes rather than discounts.

Tiered pricing: Use multiple packages or options to suit different needs, making it easier for prospects to say yes without sliding to the lowest price.

Build confidence through training: Role play objections, rehearse responses, and equip your team with scripts that reinforce brave, value-focused conversations.

Communicate the Full Price First

Always lead with the non-discounted price. When prospects see the full value and price upfront, discounts become contextual and strategic—offered as a business exchange, not a bug fix.

Example: Instead of saying, “This costs $10,000, but I can do it for $8,000,” frame it as, “The value is $10,000, which includes X, Y, and Z. If you’re interested in a long-term partnership, I can discuss flexible options.”

Reinforce the Customer’s Future Success

Connect your product or service to tangible outcomes like, saving time, increasing revenue, or reducing risk. This shifts the focus from a cost to an investment.

Example: “This implementation will save your team 40 hours a month, which translates into $X of additional revenue or cost savings. Are you willing to invest in that outcome?”

The Power of Curiosity and Discovery: Why It Matters

According to top CROs like Patrick Trumpy, the most successful sales teams dig deep during discovery. They explore the prospect’s true pain points—beyond superficial symptoms—to find what really drives urgency. Michelle emphasizes: “Deals are won or lost in discovery because that’s where trust, value, and urgency are born.” When you slow down, ask open-ended, curiosity-rich questions, and explore the prospect’s emotional stakes, you can close deals confidently, without discounts.

Example from the transcript: When a prospect mentions missing revenue targets, instead of rushing to close, the best salespeople ask, “What’s at stake if this problem persists?” and reveal emotional drivers that foster genuine urgency.

Practical “Rascal Fixes”: Keep Your Margins and Confidence

Add value, don’t subtract price: Offer tailored onboarding, extra support, or training rather than slashing prices.

Anchor to outcomes, not features: Highlight what your product or service enables them to achieve.

Implement tiered pricing: Provide different product packages suited for various budgets and needs.

Build team confidence: Regular role plays, objection handling, and storytelling increase conviction.

Train for discovery: Don’t rush the process—slow down to explore real pain and future outcomes.

Use automatic contract increases: Embed annual price rises in agreements so you don’t have to discount to renew. Example: One client I helped used contracts that automatically increased by 5% annually, eliminating the need for discounts and building predictable revenue.

The Final Word: Creating a Sustainable, Trustworthy Business

Discounting may seem like a quick fix, but data and experience show it damages long-term relationships, trust, and revenue. Instead, focus on building confidence, deep discovery, and providing value. Your pricing will stand firm, your brand’s reputation will strengthen, and customers will stay and refer others. Remember: Buyers who shop only on discounts tend to churn faster and cost more. Focus on the relationship, the outcomes, and the ongoing value you deliver.

Next step: Download the Rascal Pricing Confidence Checklist and Brainstorm Tool to prepare for your next sales call. Say no to discounts, and yes to confidence.

To gain complimentary access to ALL workbooks, scripts, and playbooks that Michelle discusses on the Revenue Rascals Podcast, fill out the form below. It's just a one-time sign up and SUPER easy.

Frequently Asked Questions: Your Discounting Questions Answered

Is discounting ever justified?

In rare cases, such as trade-offs for multi-year contracts, quicker payments, or strategic deals, discounts can be appropriate. Always anchor the discount to a strategic business reason, not just closing urgency.

How can I train my team to avoid discounting?

Use role play, objection handling scripts, and storytelling to build confidence. Reinforce that slow discovery leads to better outcomes—less reliance on price cuts.

What replaces discounts in closing deals?

Focus on uncovering the prospect’s true pain points, anchoring to outcomes, offering value-adds, and creating timing urgency. These tactics foster trust and higher margins.

How do I communicate my full price confidently?

Lead with the full value and price, then discuss options or discounts as a strategic choice. Practice your pitch and objections in training sessions so responses feel instinctive.

Can tiered pricing reduce the need for discounts?

Absolutely. Tiered packages make it easier for prospects to choose an option that fits their needs and budget, boosting the likelihood of a sale without slashing prices.

Final Takeaway

Discounting feels like an easy win, but it’s a costly shortcut. Invest in your discovery process, craft compelling value narratives, and train your team to confidently hold their pricing lines. Your sustainable growth and reputation depend on it.

Remember: When you skip discounts, you protect your margins, build trust, and foster loyalty. All key ingredients for scaling long-term success.