Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Annual ARR given up to discounting
$660,000
Annual gross profit given up
$514,800
Discounted deals per year
220
Discount cost as % of total list ARR
8.3%
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How to use this
- 1Enter total deals closed per year.
- 2Enter share of deals with a discount approved (%).
- 3Enter average discount depth on discounted deals (%).
- 4Enter average deal size at list price ($).
- 5Enter gross margin (%).
- 6Read your annual arr given up to discounting on the right — it updates as you type.
- 7Hit Share to keep the scenario or send it to someone.
About this calculator
Individual sales discounts often look small and easy to approve in the moment — 10% off to close a deal this quarter — but discounting compounds across every deal a team closes over a year into a meaningful hit to both ARR and gross margin dollars, since a discount reduces revenue while the cost to serve that customer stays the same. This calculator scales a typical discount percentage and approval rate across your full deal volume to show the aggregate annual cost, which is the number that should actually drive discount approval policy rather than any single deal's context. Discounting is rarely 'free' even when it closes a deal that otherwise would have been lost, because a durable pattern of heavy discounting also trains your sales team and your market that list price is not the real price, which erodes pricing power over time and makes every future negotiation start from a worse anchor. Track average discount depth and discount frequency over time as leading indicators of pricing discipline — a slowly creeping average discount is often the first visible symptom of increasing competitive pressure or weakening differentiation well before it shows up anywhere else in the numbers.
Worked example
Using the values the calculator loads with:
Inputs
- Total deals closed per year: 400
- Share of deals with a discount approved: 55 %
- Average discount depth on discounted deals: 15 %
- Average deal size at list price: 20000 $
- Gross margin: 78 %
Results
- Annual ARR given up to discounting: $660,000
- Annual gross profit given up: $514,800
- Discounted deals per year: 220
- Discount cost as % of total list ARR: 8.3%
What each field means
Inputs
- Total deals closed per year
- The total deals closed per year used in the calculation. Starts at 400 so you have a working example on load.
- Share of deals with a discount approved (%)
- The share of deals with a discount approved used in the calculation, measured in %. Starts at 55 % so you have a working example on load. Accepted range: 0–100 %.
- Average discount depth on discounted deals (%)
- The average discount depth on discounted deals used in the calculation, measured in %. Starts at 15 % so you have a working example on load. Accepted range: 0–90 %.
- Average deal size at list price ($)
- The average deal size at list price used in the calculation, measured in $. Starts at 20000 $ so you have a working example on load.
- Gross margin (%)
- The gross margin used in the calculation, measured in %. Starts at 78 % so you have a working example on load. Accepted range: 1–100 %.
Results
- Annual ARR given up to discounting
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual gross profit given up
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Discounted deals per year
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Discount cost as % of total list ARR
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why measure gross profit lost, not just ARR lost?
ARR lost overstates the true economic cost since the cost of serving a discounted customer doesn't drop with the discount — gross profit lost shows the actual bottom-line hit, and it's meaningfully smaller than the ARR figure but still often surprising when aggregated across a full sales team's deal volume for a year.
What's a healthy average discount rate?
It varies by motion, but most efficient B2B SaaS sales orgs try to keep average realized discount under 10-15% of list price, with tiered approval thresholds (reps can approve small discounts, managers approve moderate ones, VP/finance approves anything steep) to prevent discount creep from becoming the default close tactic.
How do tiered approval limits help control this cost?
They force accountability at the right level — a rep who can unilaterally approve 25% off has no real incentive to hold the line, while requiring manager or leadership sign-off above a threshold creates friction that naturally reduces how often steep discounts get used to paper over a weak deal or poor qualification.
What's the longer-term risk of heavy discounting beyond this year's number?
Consistent heavy discounting anchors your market and your own sales team to expect a discount as the real price, which erodes future pricing power, makes list price increases harder to execute, and can create expansion/renewal friction when a heavily-discounted customer sees their real price rise toward list at renewal.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Discount Approval Impact Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/discount-approval-impact
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/discount-approval-impact" target="_blank" rel="noopener">Discount Approval Impact Calculator — RevenueLab</a> (2026).</p>
Source: [Discount Approval Impact Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/discount-approval-impact) (2026).