SKILL LABS

Discount Impact

PROFIT

Analyze how price reductions impact your required sales volume. Avoid the discount death spiral.

Normal Price ($)

Unit Cost ($)

Discount (%)

Required Volume Boost+43%

Strategic Deep Theory

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THE DISCOUNT DEATH SPIRAL

Discounting is the most dangerous drug in business. While it provides an immediate dopamine hit of revenue, it often destroys the underlying health of the company.

If you have a 30% margin and give a 10% discount, you don't lose 10% of profit—you lose 33.3% of your profit. To make that back, you must sell 50% more volume just to stay even.

THE PSYCHOLOGICAL ANCHOR

Once you discount, you set a new 'Mental Price' in the customer's mind. They no longer see your product as worth $100; they see it as a $90 product that you were 'overcharging' for. Reverting to the original price becomes a battle against perceived greed and creates immediate churn.

TACTICAL Q&A

Q: When is a discount actually strategic?

A: Only for liquidating dead stock to free up cash or as a 'Tripwire' to acquire a high-LTV customer who will buy full-price products later.

Q: What is a better alternative to a price cut?

A: Value Stacking. Add a digital bonus, a free service, or an extended guarantee that costs you near-zero but maintains the high price anchor.

TERMS: VOLUME OFFSET vs. REVENUE

→

VOLUME OFFSET: The extra number of units you must sell to maintain the same total Gross Profit after a discount. This is the only number that matters.

→

REVENUE: The vanity number that goes up while your bank account might be staying flat or shrinking due to compressed margins.

Contextual Glossary

LTV[+]

Churn[+]

ROI[+]

Diagnostic Report

Interpretation

"10% off needs 43% more sales."

Identified Pattern

TACTICAL PROMO

SOLUTION MASTERY REQUIRED:

Value Ladder Logic