HOW MUCH PROFIT IS YOUR SALES TEAM GIVING AWAY?

Aug 24

5 min read

Pricing is something that can have a huge impact on profitability, although it’s often treated as a finance or commercial decision rather than something that sales leaders need to take real ownership of.

I think that’s a mistake. The price you achieve at the point of sale has a direct impact on the profitability of the business, and salespeople are the people having those conversations with customers every day. That means sales leadership has an important role to play in making sure the team understands the value they're offering, has confidence in the price they're asking for, and knows when a discount is genuinely justified.

It’s worth remembering that a small change in price can have a surprisingly large impact on profitability. If you sell something for £100 and increase the price by just 1%, you’ve added another £1 to the revenue without needing to sell another product or find another customer. Across a business, those small improvements can quickly add up.

That’s why I think pricing deserves much more attention within sales leadership.

Summary Highlights

Pricing is one of the biggest levers available to improve profitability.
Sales teams need to understand how pricing decisions affect the wider business.
Your list price should reflect the value you provide rather than creating artificial room for discounting.
Discounting should have clear principles and agreed boundaries.
Salespeople shouldn't automatically move to another round number when a customer challenges price.
The best discounts should reward behaviours and relationships that genuinely benefit the business.
Pricing and discounting should be continually reviewed rather than treated as a one off exercise.

PRICE IS ABOUT MORE THAN THE NUMBER

When a salesperson presents a price to a customer, it’s easy to think that the conversation is simply about whether the number is acceptable.

Price is part of the overall value proposition, and the customer is making a judgement about whether the value they expect to receive justifies what they're being asked to pay. That means salespeople need to be able to articulate the value behind the price rather than immediately reaching for a discount when a customer pushes back.

I've seen situations throughout my career where the gap between a list price and the eventual selling price has been significant. Sometimes that’s perfectly understandable, particularly where there are genuine commercial reasons for offering a different price. What concerns me is when discounting becomes an automatic part of the sales process.

If the team expects to discount every deal, then the list price starts to lose credibility.

YOUR SALES TEAM NEEDS TO UNDERSTAND THE NUMBERS

One of the simplest things a sales leader can do is make sure the team understands how pricing works.

I'm a big believer in transparency here. Salespeople should understand how prices are calculated, what the implications are for profitability, and how their own commission or bonus might be affected by the decisions they make.

When a salesperson understands that giving away another 5% isn't simply reducing the customer's bill, but is taking a meaningful amount of profit away from the business, they're much more likely to think carefully about whether the discount is really necessary.

It also helps create a sense of ownership. Your sales team isn't simply following a pricing policy created somewhere else in the business. They're making commercial decisions that directly affect the success of the organisation.

MAKE YOUR PRICING PROCESS SIMPLE

I've always felt that sales teams need simple processes around pricing.

They should be able to access realistic list prices quickly and understand what they're allowed to negotiate without having to navigate a complicated approval process every time a customer asks for a better deal.

Your list price should also be credible. If you've deliberately inflated your prices because you expect salespeople to offer 20%, 30% or even larger discounts, you can create a strange dynamic with customers. They quickly learn that the published price isn't really the price, and the negotiation becomes about how much discount they can extract rather than the value you're providing.

I'd much rather see a realistic price that reflects the value of the product or service, with a clear approach to when and why a discount might be appropriate.

DISCOUNTING NEEDS GUARDRAILS

I'm not suggesting that businesses should never discount. There will always be situations where a commercial adjustment makes sense. Perhaps there’s a strategic reason to win a particular piece of business, a customer is making a significant commitment, or there’s a genuine competitive situation that needs to be considered.

The important thing is that your sales team understands the rules.

What level of discount can they agree themselves? When does an approval become necessary? Who has the authority to approve something outside the normal guidelines? And, perhaps most importantly, what does the salesperson need to demonstrate before asking for that approval?

If those things aren't clear, discounting can quickly become a habit rather than a commercial decision.

STOP DISCOUNTING IN THE SAME OLD WAY

There's one particular behaviour around discounting that has always frustrated me. I call it "groove discounting".

A customer says the price is too high, so the salesperson offers 10%. The customer pushes again, so it becomes 15%. Still not enough? Perhaps 20% will do it.

You can almost see the salesperson moving through the standard numbers in their head.

The problem is that there's no real commercial thinking behind it. If 20% hasn't worked, why would 25% suddenly be the right answer?

I'd encourage sales teams to become much more thoughtful about this. If 20% doesn't get the customer to where they need to be, perhaps try 21.3% and see what happens. It might feel unusual, but that's partly the point.

You may find that the customer tells you exactly where they need to be, which gives you much more useful information than simply giving away another 5% because that's what you've always done.

It’s a small change in behaviour, although across a sales team and a full year of trading, those small decisions can have a meaningful impact on margin.

PRICING IS A CONTINUAL IMPROVEMENT OPPORTUNITY

I don't think pricing should be something you review once a year and then forget about.

Markets change, competitors change, customer expectations change, and your own cost base changes. Your understanding of the value you provide should also continue to develop.

That means sales leaders should regularly look at the prices being achieved, the discounts being given, the reasons behind those discounts and the customers receiving them.

There may be some simple opportunities sitting inside the data.

Perhaps certain salespeople discount more than others. Perhaps some products are consistently being discounted despite having strong demand. Perhaps a particular customer is receiving a level of discount that no longer makes commercial sense.

These aren't necessarily big strategic projects. Sometimes they're simply details that need someone to pay attention to them.

THE BIGGER LESSON

Pricing and discounting are ultimately about protecting the value your business creates.

Your sales team has a huge influence over that value because they're the people negotiating with customers every day. Giving them the right knowledge, confidence, processes and commercial guardrails can make a significant difference to the decisions they make.

For me, good sales leadership means making sure the team doesn't simply chase revenue.

Revenue matters, of course, but profitable revenue matters far more.

That means continually asking whether we're achieving the right price, whether we're giving away value unnecessarily, and whether the discounts we're offering are actually helping the business grow in the right way.

The details matter. And when sales leaders take care of those details, they can have a much bigger impact on sales performance and profitability than they might realise.