Discounting is a downstream symptom

Why CFOs should look at pricing power as a strategic infrastructure question - not a sales discipline one.

When discount rates start creeping up across a pipeline, the operational instinct inside most finance functions is to tighten approval thresholds. Cap the discretion. Require sign-off above a certain percentage. Build a control to defend the price.

That instinct is sensible. It is also working on the wrong part of the system.

Rafi Mohammed makes a great observation in a recent piece for Harvard Business Review. Most companies, he argues, view discounting as “a white flag - an admission of defeat that a product isn’t selling as well as hoped”. The result is a culture that treats every concession as a reactive tactic, rather than a disciplined commercial tool. Treating discounts as a targeted instrument rather than a sign of failure is a meaningful upgrade in how most businesses manage price.

But that stops short of the more useful question. Why does a sales team reach for the discount lever in the first place?

In almost every case we see at the senior-leadership table, the answer is not really about price. The buyer arrived at the conversation without clarity on what they were buying, or why the number on the page held its weight. Somewhere between the first touchpoint and the proposal, the offer became negotiable in the buyer’s head - not because it was overpriced, but because it was under-articulated.

That gap is not a sales problem. It is a strategic infrastructure problem.

Pricing power is downstream of positioning coherence

When the strategic infrastructure underneath a business is built well, the sales conversation arrives already partly closed. The buyer understands the category the business is operating in, the position it occupies inside that category, and the specific reason its offer is shaped the way it is. The price feels inevitable, not negotiable.

When that infrastructure is missing - when the positioning is unclear, the value proposition is generic, or the messaging shifts depending on who in the company is in the room - the buyer arrives at the price with no anchor. They have nothing to weigh the number against except other numbers they have seen elsewhere. So they push. And the sales team, working without the infrastructure to defend the price coherently, concedes.

The same dynamic plays out internally. Sales leaders who cannot articulate the proposition consistently across their team produce inconsistent discounting behaviour at the deal level. New hires who join without a clear sense of where the business sits in the market default to price as the lever they understand. The discount rate is not a measure of how aggressive your buyers have become. It is a measure of how confident your own commercial function is in the offer it is taking to market.

What the data is starting to show

Strategic discounting is a capability that compounds on top of strategic infrastructure. It is not a substitute for it. A business that has not done the harder work of clarifying who it serves, what it stands for, and why its offer is shaped the way it is will find that any discounting framework it tries to operate becomes reactive again within a quarter or two. The infrastructure decides what the framework can hold.

What this means for the CFO conversation

The most expensive misreading of a rising discount rate is that it is a sales discipline issue. It is occasionally that. More often, it is a signal that the infrastructure underneath the sales motion has not kept pace with the stage of the business.

The CFOs we work alongside who have made this connection have started asking a different question of their commercial function. Not “are we approving too many exceptions?” but “is our proposition clear enough that price should not be the lever this often?” The second question is harder to answer. It is also the one that determines whether margin holds or erodes over the next twelve months.

Discounting is a downstream symptom. The upstream cause sits inside the strategic infrastructure the business has built - or hasn’t. The teams that recognise this don’t spend less time on pricing discipline. They spend it differently. They invest at the level that determines whether the discipline is needed in the first place.

Sources: Mohammed, R. (2026). ‘The Art of Discounting.’ Harvard Business Review, 4 May 2026. https://hbr.org/2026/05/the-art-of-discounting