"Price is what you pay, value is what you get." - Warren Buffett
Backstory: I tried to lower the buyer's risk with a discount. What he needed was more proof.
Mistake #3: I discounted to close deals, instead of adding more value.
A great deal is when the gap between the price and the value is so big that it's a no-brainer.
Also called consumer surplus.
Every deal ended the same way.
The demo went well.
The proposal went out.
Then the email: "Can you do better on the price?"
And I did. 20% at first. On larger deals, 40–60% off, just to close.
I believed the buyer was afraid of the price. So a cheaper deal felt like a safer deal for him.
What it produced:
Good: Deals closed.
Bad: A discount reduces the perceived value. The customer starts seeing your pricing as a joke.
Bad: Tighter margins, so less budget to deliver the result.
Bad: It teaches the team to sell with discounts instead of selling value.
Here's what I missed:
The buyer wasn't scared of the price. He was scared of making the wrong decision.
Not that the solution doesn't work. That it doesn't work for him.
A discount doesn't answer that question. Proof does.
You can widen the gap two ways: lower the price, or raise the value.
Solution: We built the value first, then raised the price. Not the other way around.
How we built value:
The result: the KPI the customer gets measured on → proof of the number
The flow: a timeline of what happens when, so the result is not a hope, it's a system we followed → proof it's repeatable
The risk: if something didn't work, we worked with them one on one until it did → proof we own the outcome
The speed: integration, onboarding, SOC 2, a super responsive customer success team, fast decision making on our side, time to ROI → proof of time to value
Then we raised the price. From 3 cents per shipment to 10 cents. More than tripled, overnight.
What the pricing looked like after:
Most customers paid $50–100K a year, paid upfront
The largest paid over $300K a year
Onboarding was $12–20K
Usage-based, so finance could forecast it, and the payment grew as performance grew
The math for a $100K customer:
Over $1M a year saved on customer service, chargebacks, and recovered returns
$200K in revenue from upsells
10–12X ROI
Would you pay $100K to make $1M?
Everybody would!
Why this works:
The buyer's real question is "will it work for us?" A discount leaves it open. A number, a timeline, and a guarantee close it.
When the value is built first, the price is a consequence of a number he can check, not a negotiation.
And usage-based pricing shares the risk with him. He pays more only when it works.
The results:
Revenue went up shortly after
More customers, and better customers
The company doubled in about six months
Customers said thank you at more than 3X the price
So pull your last ten deals.
Count how many closed at full price.
Next to every discount, write the value you could have offered instead.
You're done when you can answer "why should I pay full price?" with a number, a timeline, and a guarantee, before the proposal goes out.
A rep reaches for a discount when he doesn't have the math. Give him the math, the flow, and the guarantee, and the discount conversation ends before it starts.
Secret Sauce: Don't lower the price. Add more value.
Raise the value, then raise the price even more.
Best,
Virgil
PS: Mistake #4: I jumped from one sales call to another.