Thought starter
Whoever the salesperson asks
"Discounts are approved by whoever the salesperson asks." It is one sentence on our pricing grid, and the one people quote back.
Not because it describes a business with no rules. Because it describes a business with rules, in a handbook, that everybody in the room recognises they do not use.
That is the useful thing about an unflattering sentence. Nobody identifies with having no discount policy. A lot of people, reading that cell, quietly recall the last urgent deal.
The policy that exists on paper
The most common real answer to "who can give price away" is the second cell. An approval ladder exists on paper but is routinely bypassed for anything urgent. The ladder was written properly. Sales representatives to 5%, managers to 10%, the general manager beyond that. It sits in the handbook and it is, in a sense, true.
In practice, a deal arrives on Thursday with a Friday close. The representative needs 12%. Their manager is travelling. They ask the other manager, who is in the office and has the authority.
Or they ask the commercial director directly, framing it as a strategic account. Or they give 8% on price and the rest in extended terms, which the ladder does not mention. The deal closes. Nobody records the discount as an exception, because technically someone with authority approved it.
Multiply by every urgent deal, which is most of them, and the ladder is decorative. The salesperson has learned, correctly, that the real approval process is: find someone who will say yes. Hence the sentence.
What it does to selling
The discounts do some damage. The process does more, through what it teaches.
It teaches the customer that the first price is not the price. Buyers learn quickly which suppliers have an approval step they can push against. The line "let me see what I can do" moves from the end of every negotiation to the opening.
It teaches the salesperson that price is the lever. If the fastest way to close is to find an approver, the representative gets good at finding approvers. Defending value gets no practice. The sales incentive, usually paid on revenue, agrees with them. Every discount that closes a deal is rational.
It teaches both sides that price can be negotiated away without trading anything tangible: longer delivery time, shorter payment terms, quarterly volume.
And it teaches the business nothing at all, because none of it is recorded. Nobody can review overrides nobody counted. So next year the same customer gets the same discount for the same non-reason. The pocket price drifts down a point at a time, and nobody has decided anything.
The fix takes a fortnight
The instinct is to buy quoting software with hard stops. Resist it for now. The software enforces whatever ladder you give it. If the ladder is wrong, the sales team will route around the software as fluently as they routed around the handbook.
Do three things first.
Write the ladder that reflects the deals you do. Who can give what, by how much, for what deal size. Above all, what counts as a discount: price, terms, freight, free goods, rebates. If terms are not on the ladder, every discount becomes terms. This takes one meeting with sales and finance in the same room.
Switch on tracking, even in a spreadsheet. Every discount above the representative's own authority gets a line: customer, amount, form, who approved, why. The log exists to count. It punishes nobody. Within a quarter you will know the override rate, which approvers say yes to everything, and which customers arrive with an urgent deal every month.
Review the pattern. Quarterly, read the log for what it says about the structure.
If a third of deals need an exception, blame the price structure before the sales team. It does not fit the business, and the exceptions show you where. Fix the structure and the exceptions fall.
The point is not policing
At the top of this practice, override rates fall over time. The guidance is good enough that sales rarely needs to escalate. Nobody stops every discount at the gate. That guidance is a target, a floor and a walk-away price for the ten most common deal situations, visible at the point of quote. Sales trusts it because it demonstrably wins deals at better margins.
The top stage sits a long way from "whoever the salesperson asks", and the distance is worth points of margin. But the first step is short. Write the real ladder, start counting, and read the log.
To see how much money is in it, first build the price waterfall for your ten largest customers. The exceptions will be sitting in it, in dollars.