Key Takeaways
- Discount problems often start when businesses focus on margin without understanding what customers actually value.
- Cutting discounts can protect margin per sale while accelerating volume loss and weakening overall profitability.
- Global pricing programmes can fail when they ignore local market conditions, customer behaviour and price perception.
- Strong pricing decisions test beliefs against both financial evidence and customer value before changing the price.
Discount problems rarely start with the discount itself. They start when a business assumes it knows why customers buy, how much value they perceive, and what will happen when the price changes.
It’s a tops to tops call. The local CEO on one line, global head office on the other, and head office isn’t asking. “Your market is weighing on our international numbers,” the voice from head office says. “Operators are running locations that don’t make money, the deals have gone too far, and we need you back on the pricing program, the same one that works everywhere else.” The local CEO tries to get a word in about the market, the price ceiling, the cost base. “We hear you,” head office cuts back in. “Fix it. We’ll be watching the numbers next quarter.” It’s an instruction rather than a discussion, delivered from half a world away by people running one global model, not thirty local ones.
The local CEO gets off that call and walks straight into a room with the pricing team. “Head office wants us back on the program. I need a recommendation on the promotional calendar, and I need it by Thursday.” There’s no instruction yet on what the recommendation should actually say.
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That part is still, genuinely, an open question.
The pricing team goes away, and three legitimate voices immediately pull in three different directions around them. Marketing doesn’t want the promotional calendar touched, because sales are already down and the deals are what’s driving what traffic remains. Finance wants operator margin restored, because a number of locations are losing money, and a closed location is a worse outcome for everyone than a slower one. And head office needs the group number to move, because this market’s underperformance is already showing up in numbers the parent company has to explain publicly.
All three arguments are reasonable, and none of them speak for the customer.
By Thursday, the pricing lead has built a margin picture: which specific deals and price points carry the thinnest margin, which channels, days and times are propping up volume that disappears the moment the discount does, and what each path costs. It’s a margin story, not the real picture. It’s product- and promotion-level cost analysis, not a study of what customers actually value or why they keep ordering.
The pricing lead presents it to the executive team. They look at the same picture and decide on a blanket cut, genuinely believing they can protect the margin and keep the customers by cutting discounts across the board, because the last few years looked like proof the brand could carry it.
The cut goes ahead. Within the year, a business that had been solidly profitable posts a net loss instead. Order volume falls further than anyone modelled, enough that the higher average ticket customers are now paying does nothing to close the gap. Many locations close, and behind every one of those closures is an operator who has lost their livelihood and staff who no longer have a job to go to. The CEO who backed the decision doesn’t survive the fallout.
The next one lasts less than a year before the board decides the turnaround isn’t moving fast enough either. Head office’s public response isn’t sympathy. It’s naming this market directly as the problem dragging down the group’s international numbers. Everyone in the local head office feels the pain of loss, not just in margin, but in careers. Now, any subsequent decisions the local executive team makes will be made with that same fear of loss sitting in the room too.
Discount Problems Start When the Customer Is Missing
It starts with the CEO, and it starts with a genuine belief in technology. During COVID, the business invested heavily in technology: a better digital experience, sharper customer tracking, a platform that made it look more sophisticated than anyone else in the category. The CEO backed that investment to the board and to head office, more than once, genuinely believing it was what kept customers coming back.
The finance director backed the same story to the board six months earlier. Marketing built two years of campaigns on it. By the time the margin picture landed on the table, every voice in that room had already put its name to the belief now being tested.
The Discount Problems Nobody Put in the Room
There was one voice missing from every meeting: the customer. Finance knew the margin. Marketing knew the traffic. Pricing knew the promotional economics. Head office knew the group performance. The CEO knew what had worked before. Nobody knew whether the customer still thought the everyday price was worth paying.
Does believing something make it true, though? Customers did value the platform, but nobody stopped to weigh how much of that loyalty was real against how much was simply having nowhere cheaper to go during lockdown. When the market reopened, the strength of the belief must have waned. Customers had a wealth of alternatives again, and they didn’t hesitate. The executives learned what the belief was worth at the same time everyone else did: in the results. By then, the belief had already shaped a decision nobody could easily walk back.
Head office built its reputation on “one global pricing program that works everywhere.” It has said so publicly, more than once. Admitting this market needs something different would mean admitting the program has limits. Nobody at head office has said that yet.
Nobody in this pricing scenario ever really answered the question: with the product, the packaging, the customer experience all staying exactly the same, is removing a discount a return to value, or just a price rise wearing a nicer name? When the results came back, first it was margin. Then it was orders. But did they know what the customer actually wanted, felt or valued? That’s where many discount problems begin: a business knows what a promotion costs but doesn’t know what role that promotion plays in the customer’s perception of value.
What That Call Should Have Covered to Avoid Discount Problems
Understanding why the belief formed doesn’t fully explain why businesses chose to protect it. In sixteen years of pricing work, I’ve watched one psychological pattern explain almost every version of this decision: confirmation bias, what capable, engaged people do with evidence once they already have something real riding on a belief. Evidence that fits gets treated as proof, evidence that doesn’t gets ignored, blurred, glossed over, or treated as worth a closer look at some non-descript time. That’s how a business with clear cost and margin numbers already on the table can still land on a decision those numbers may not fully support: belief is hard to see past once you’ve staked something on it.
I’ve also seen what happens when a global parent names a specific market as the problem dragging on international results. The instruction rarely stays “cut harder” for long. Once margin comes back and volumes fall further than modelled, the messaging shifts to a correction: the profit-first phase went too far, and the market now needs “the right kind of value” to rebuild volume. Invariably, head office sets a vague direction and gets a blunt local answer back. Calling something a value strategy doesn’t make it one.
Once results deteriorate, something else changes.
The organisation gets scared, and decisions that were already being made under pressure are now being made under the memory of the last decision going wrong. Head office wants results faster, and the local team becomes less willing to challenge the program. Precision starts to look slow, and speed starts to look safe. The original pricing assumption survives, not because it was ever tested and found right, but because nobody wants to be the one responsible for testing it again. Evidence can confirm a belief just as easily as it can refute one. The real failure was never finding out which one this was.
The point of this pricing story isn’t to stop discounting. It’s to know whether your everyday price already earns its keep. If it does, the discount was never doing the real work. Something else was: service, speed, trust, convenience, quality, or a genuine gap between what you charge and what you deliver. If it doesn’t, removing the discount doesn’t reveal hidden loyalty. It reveals the value gap that was there all along.
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That is why discount problems can’t be solved by looking at discounts in isolation.
You need to understand whether the everyday price is credible, whether customers perceive enough value to pay it, and whether the promotion is creating genuine incremental demand or simply subsidising customers who would have bought anyway.
So, as someone who wants you to get this right: before you cut a discount to protect margin, do you know what type of pricing organisation you really are? Is your price already fair for what customers get? Do your customers perceive value the way you do, or is the discount the only thing making the deal feel fair? Harder still: if someone put the full picture in front of your executive team tomorrow, margin and customer value, would the evidence change the belief, or would the belief change how you read the evidence? If you’re not certain, that’s the answer.
If that sounds familiar, I’d like to hear about it. Message me directly.
Notes
This is a dramatised pricing scenario informed by patterns I’ve encountered in real businesses. Dialogue and identifying details are illustrative.
Nickerson, R.S. “Confirmation Bias: A Ubiquitous Phenomenon in Many Guises,” Review of General Psychology, 1998.
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