In most Nigerian businesses where discounting has become endemic, the problem is not weak salespeople. It is the absence of rules that make holding price the path of least resistance. Here is the diagnosis and the fix.
Why discounting spreads
Discounting is rational behaviour in the absence of structure. When a salesperson faces a choice between a difficult conversation about value and a quick price concession that closes the deal, the incentive structure of most Nigerian sales environments makes the concession the easier choice. There is usually no formal approval required for discounts below a certain threshold. The price list is treated as a starting position rather than a statement of value. And the salesperson's commission is calculated on revenue rather than margin — meaning a discounted deal still pays.
Once discounting becomes the norm in a sales team, it escalates through a well-documented economic mechanism: anchoring. Customers who have been given a 15% discount in one negotiation anchor to that as the starting point for the next one. Salespeople who routinely concede 15% begin pre-empting negotiations by quoting 15% above list price before starting, which trains customers to always expect a discount. The list price loses all informational value and becomes a fiction that everyone sees through.
The cost is visible in your gross margin trend over time. If your revenue is growing but your gross margin is declining, discounting is almost certainly part of the explanation.
Three misconceptions that keep discounting in place
"We have to discount to compete"
This is the most common justification and the most frequently wrong. In most Nigerian B2B markets, the decision to buy is driven by a combination of trust, reliability, relationship, and commercial terms — of which price is one component. Organisations that have lost deals they believed were price-driven often discover, when they probe more carefully, that the real issue was a failure to communicate value clearly enough, a slow response in the proposal stage, or a weaker relationship with the decision-maker than the competitor had. Price was the stated reason; it was not always the actual reason.
"A discounted sale is better than no sale"
This is true at the margin but dangerous as a default position. A discounted sale consumes the same delivery capacity as a full-price sale, creates a reference point that depresses future pricing with the same customer, and reduces the margin available to invest in quality, capacity, and growth. The economic question is not "is this sale better than nothing?" but "is this sale the best use of our sales and delivery capacity right now?"
"Our customers will leave if we hold price"
Some will. But the customers most likely to leave over a price increase are typically also those with the lowest margins, the longest payment cycles, and the highest service demands — the customers whose departure improves your business economics. Holding price tends to accelerate natural selection in your customer portfolio toward customers who value what you do rather than those who are purely optimising price.
The four pricing rules that fix discounting
Rule 1: Define your floor price, not just your list price
Your list price is the price you aspire to receive. Your floor price is the minimum price at which the deal is worth doing — below which you are either losing money on the engagement or destroying your pricing credibility with the customer for future business. Calculate the floor price for each product or service and make it an explicit policy. No deal may be closed below floor price without written sign-off from a director. This single rule eliminates the worst discounting immediately.
Rule 2: Require a value concession in exchange for any price concession
Discounting is economically damaging because it reduces revenue without reducing costs. The fix is to ensure that every price concession is matched by a reduction in what is delivered: a smaller scope, a longer payment term to the supplier, a reduced service level, a removal of a feature or deliverable. When salespeople are required to explicitly take something off the table every time they reduce the price, discounting becomes a less attractive shortcut. It also trains customers that price and value are linked rather than decoupled.
Rule 3: Pay commissions on margin, not revenue
If your sales commission is calculated on revenue, discounting costs your salespeople nothing. Switch the commission base to gross margin — even partially — and the incentive immediately aligns with the business's interest. A salesperson earning commission on a 40% margin deal now has a direct financial reason to hold price rather than concede it.
Rule 4: Create a visible approval process for exceptions
The approval process for a discount should be slightly uncomfortable — not bureaucratic enough to kill deals, but visible enough to create accountability. A simple rule: any discount above 10% requires a written one-paragraph justification submitted to the sales manager before the proposal goes out. The act of writing the justification forces the salesperson to test whether the discount is genuinely necessary or just convenient.
Implementation sequence
Do not implement all four rules at once. Start with Rule 1 — calculating and communicating floor prices — in the first month. Add Rule 4 in month two. Review commission structures in month three. Rules 2 and 3 tend to require more change management and are more effective once the first two have normalised the expectation that discounts are not automatic.
Track your average transaction discount rate monthly. In most organisations that implement these rules consistently, the average discount rate falls by 30–50% within two quarters — without a material change in win rate.