Discount Rate
Average discount applied to deals as a percentage of list price
What is Discount Rate?
Discount rate is the percentage of list price given away as discounts on closed deals. It shows how much price is conceded to win business.
Heavy discounting reduces revenue and margin and can train customers to expect lower prices.
How this KPI is measured
- Function
- Sales
- Sub-function
- Deal Management
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Total discount given / Total list price of closed deals) × 100
How to calculate it
Divide total discount given by total list price of closed deals, and multiply by 100.
For example, if closed deals had a combined list price of 2,000,000 and 300,000 of discount was given, the rate is 15%.
Split by rep, deal size and product to see where discounting is heaviest.
Where it is used
Protecting margin
Spot excessive discounting.
Setting discount policy
Decide approval limits.
Coaching
Help reps sell value instead of price.
How to improve it
Tips and common mistakes
- Discounts are sometimes right. The issue is unmanaged discounting.
- Compare discount with win rate to see whether it really wins deals.
- Watch end-of-quarter patterns.
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