Situation
Halvorsen wants to add 40 hosts. AE Derek Olsen requested 35% off list, citing “competitive pressure.” Close date in 5 days.
What I did
Before touching the discount request, I benchmarked it:
| Reference point | Effective discount |
|---|---|
| Halvorsen’s current contract | 22% |
| Segment median, Enterprise expansions, last 4 quarters | 24% |
| Segment top quartile | 31% |
| Requested | 35% |
Then I asked Derek what the competitor was actually quoting. He had a number: $48/host/month. Ours at list is $62. At 22% (their current rate) we are at $48.36. The customer’s existing rate already matches the competitor. The 35% request was a reflex, not a requirement.
Recommendation
Hold 22% on the expansion (co-term with the existing contract, same rate, clean paper). Offer one give the competitor cannot: a 90-day ramp on the 40 new hosts so Halvorsen pays for 15, then 30, then 40 as they migrate.
- Cost to us: about $11K in deferred revenue timing.
- Cost of the extra 13 points of discount Derek asked for: $38K a year, forever.
Result
Signed at 22% with the ramp. Derek’s deal closed on time and the account’s blended rate stayed intact for the renewal.
The worksheet I use
Use this on any discount request above segment median.
| Field | Value |
|---|---|
| Customer / deal | |
| Requested discount | |
| Current contracted rate | |
| Segment median (last 4 quarters) | |
| Segment top quartile | |
| Competitor quote (verified?) | |
| Gap to competitor at current rate | |
| Non-price levers available | term · ramp · prepay · co-term · marketplace · scope |
| Proposed give | |
| Named get | |
| Annual cost of the give | |
| Annual value of the get | |
| Recommendation |