Why Use This Calculator?
To visualize how routine discounts erode overall revenue when applied at scale.
Formulas
\(\text{Discount Amount} = \text{Base Price} \times (\text{Discount} / 100)\) \(\text{Total Lost} = \text{Discount Amount} \times \text{Volume}\)
Comparison Table
| Discount Level | Impact on MRR | Approval Level | |—|—|—| | 5-10% | Low | Manager | | 15-20%+ | High | VP/CRO |
Step-by-Step Guide
- Enter the base price of the deal.
- Enter the average discount percentage.
- Enter the total deal volume.
- Review the Total Revenue Lost.
FAQs
Why calculate discount impact?
Small discounts across many deals can severely impact bottom-line ARR.
What is a standard SaaS discount?
Usually between 5% and 20%, heavily depending on deal size and term length.
How to minimize discounting?
Focus on selling value rather than price, and enforce strict approval matrices.
Do discounts affect commission?
Yes, reps are typically paid on final ARR, so their payout drops too.
Is multi-year discounting better?
Yes, exchanging a discount for a multi-year lock-in improves LTV/CAC.
How does this affect margin?
It directly lowers the gross margin since cost of delivery remains the same.