Discount authority
A written rule on who may approve a discount and up to how much, by role.
In plain words
Discount authority answers one question: who may say yes to a lower price, and how low. A seller may give a small discount alone. A larger one needs the head of sales. Beyond that, the owner decides. Each level has a ceiling written down.
Without the rule, every seller sets their own limit, and the customer finds the softest one. The rule lives in a short document and in the CRM. The deal card shows the full price, the final price and who approved the gap. A discount above the seller's level waits for approval.
Worked example (invented numbers)
Price $8,000 and a request for 12% off. The seller limit is 5% and the head of sales limit is 10%, so the owner decides.
How to use it
The owner sets the levels, because discounts spend the owner's margin. The head of sales applies them every day and reviews them in the weekly pipeline review. For each deal at the decision stage, check that the discount matches the level of the person who approved it.
Once a month, look at all approved discounts by level. If most deals need the head of sales, the seller limit may be too low, or prices too high. If discounts cluster just under a limit, sellers treat the limit as the target. Either finding is a decision for the owner.
Discount authority sets the frame for every concession. It gives the trade-off a boundary: the seller knows what they may offer before the meeting. Margin shows what each level costs. The owner uses that number to decide whether the levels stay or change.
Common mistakes
- Keeping the rule in someone's head. A limit nobody wrote down is a limit nobody follows. Put the levels in one short document and in the CRM.
- Counting price only. Free work, long payment terms and extra months also cost margin. Count them in the same limit as price cuts.
- Approving by chat at night. A quick yes in a message skips the check of margin and of the return. Approve in the CRM, with the reason on the deal.
- Setting limits as a fixed norm. Example (invented numbers): a seller limit of 5% and a head of sales limit of 10% are only a start. Test them for a quarter, then review with the owner.
NEXT STEP · TOOL
By Friday, the head of sales writes the discount levels on one page. Seller, head of sales, owner: each with a ceiling. Include non-price concessions in the same limits. Send the page to the owner for a yes or a change. Then add an approval field to the deal card in the CRM. From Monday, any discount above the seller's level needs that field filled.
A weekly meeting on stuck deals that ends with a decision and an owner for each.