KPISales

Average Discount Depth

Average percentage discount applied across all closed deals relative to list price

What is Average Discount Depth?

Average discount depth is the percentage of list price given away, on average, across closed deals. It shows how much price is conceded to win business.

Deep average discounts reduce revenue and margin and can signal weak value selling or pricing that is too high.

How this KPI is measured

Function
Sales
Sub-function
Pricing
Industry
All Industries
Type
Lagging
Impact
Financial control
Unit
%
Measurement frequency
Monthly / Quarterly
Formula
(Total discount given / Total list price of all closed deals) × 100

How to calculate it

Divide total discount given by total list price of all closed deals, and multiply by 100.

For example, if closed deals had a list price of 3,000,000 and 450,000 was discounted, the depth is 15%.

Look at the distribution by rep and deal, since a few deep discounts can pull up the average.

Where it is used

  • Protecting margin

    Spot excessive discounting.

  • Setting approval limits

    Decide who can approve what.

  • Coaching

    Help reps sell value.

How to improve it

Tips and common mistakes

  • Similar to discount rate, use one definition consistently.
  • Watch quarter-end behaviour.
  • Link discounting to win rate to test its impact.

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