A “tiny” 10% discount can nuke 75% of your profit.
Sounds dramatic? It’s math.
And it’s why the “discount to win” playbook often starts a death spiral.
A founder messaged me: “We’re flat. Thinking 10% off to goose sales.”
I get the instinct. But here’s the trap door.
From Your Business Growth Playbook , run a simple, real P&L:
Revenue: $4.0M
– COGS: $1.0M (25%)
– Expenses: $2.5M
= Net Profit: $500k (12.5%)
Now take 10% off:
Revenue slides to $3.6M; COGS is still $1.0M (your suppliers didn’t discount).
Expenses don’t budge.
Net profit collapses to ~$100k (~2.7%).
That “small” discount just torched ~75% of profit.
“Okay, but we’ll make it up in volume.”
Maybe. But volume has to climb a lot just to get back to the same dollars of profit you had pre-discount. Push to 15% off and you can tilt negative – losing money – before you even count the extra headaches of fulfillment and support.
And there’s the behavioral boomerang: once buyers learn you run promos, they wait. You didn’t create urgency; you trained delay. Now you’re stuck running more discounts to pull demand forward, compressing margin each cycle. That’s the discounting death spiral.
So what do you do when growth stalls and pressure builds?
Here are three plays from the book that protect margin and momentum:
1. Increase perceived value without lowering price.
Add outcomes, access, or speed: priority onboarding, done-for-you elements, VIP support, faster turnaround. Price stays firm; value rises.
2. Use bouncebacks to lock in the next purchase.
Schedule the follow-up during the current transaction. Offer members-only early access, next-step booking, or simple convenience perks. Incentive = ease, not a coupon.
3. Build continuity so frequency carries you.
Memberships, retainers, replenishment. Recurring revenue beats sporadic promo spikes – no margin erosion required.
🧠 Bottom line
If you’re stuck, discounting feels like the fastest lever. It’s usually the most expensive. Protect margin. Retrain your buyers. Pull levers (F, A, and Q) that compound.
Which lever are you leaning toward right now: discount to win quick deals, or hold price and increase value?