# Discount Leakage Calculator

> Quantify exactly how many points of margin your team is bleeding to unauthorized discounting, broken out by rep and by quarter, so you know whether it's a coaching problem or a systems problem.

Free calculator/tool for sales leaders. Topic: [Negotiation & Closing](https://www.peerlab.ai/library/topic/negotiation-closing/). Published by PeerLab in the [Sales Enablement Resource Library](https://www.peerlab.ai/library/). Source: https://www.peerlab.ai/library/discount-leakage-calculator/

## How to use it

Pull list price, realized price, and rep name for every closed deal each quarter into the worked-example table, calculate leakage per deal, then roll up by rep and by quarter to find where coaching or approval-workflow fixes are actually needed.

## What's inside

- The 3 inputs required per deal: list price, realized price, approved threshold
- The unauthorized-leakage formula, deal by deal
- Roll-up formulas: total leakage $, leakage % of bookings, points of margin bled
- A fully worked 5-deal, 2-rep example with totals
- Benchmark bands for healthy vs. urgent leakage levels
- A root-cause checklist to diagnose WHY leakage is happening
- A quarterly tracking table template

### For sales leaders, quantify margin lost to unauthorized discounting

## Step 1, Inputs per deal
- **List Price (LP)**, standard price before any discount
- **Realized Price (RP)**, actual invoiced amount
- **Approved Discount Threshold (ADT%)**, max discount a rep can approve without escalation (e.g., 10%)

## Step 2: Per-deal formulas

**Discount Given %** = (LP − RP) ÷ LP × 100

**Authorized Discount $** = LP × MIN(Discount Given %, ADT%)

**Unauthorized Leakage $** = IF Discount Given % > ADT%: LP × (Discount Given % − ADT%), ELSE $0

## Step 3: Roll-up formulas (period level)

**Total Leakage $** = SUM of Unauthorized Leakage $ across all deals in the period

**Leakage % of Bookings** = Total Leakage $ ÷ Total List-Price Bookings × 100

**Points of Margin Bled** = Total Leakage $ ÷ Total Realized Revenue × 100

---

## Worked example: one quarter, 2 reps, 5 deals

| Rep | Deal | List Price | Realized Price | Discount Given % | Approved Threshold % | Authorized $ | Unauthorized Leakage $ |
|---|---|---|---|---|---|---|---|
| Rep A | Deal 1 | $50,000 | $45,000 | 10% | 10% | $5,000 | $0 |
| Rep A | Deal 2 | $80,000 | $64,000 | 20% | 10% | $8,000 | $8,000 |
| Rep B | Deal 3 | $30,000 | $27,000 | 10% | 10% | $3,000 | $0 |
| Rep B | Deal 4 | $60,000 | $45,000 | 25% | 10% | $6,000 | $9,000 |
| Rep B | Deal 5 | $40,000 | $38,000 | 5% | 10% | $2,000 | $0 |
| **Total** | | **$260,000** | **$219,000** | | | **$24,000** | **$17,000** |

- Leakage % of Bookings = 17,000 ÷ 260,000 = **6.5%**
- Points of Margin Bled = 17,000 ÷ 219,000 = **7.8 points**
- By rep: Rep A leaked $8,000 (1 of 2 deals over threshold); Rep B leaked $9,000 (1 of 3 deals over threshold): leakage is concentrated, not evenly spread, which points to a coaching issue on specific deals rather than a broadly broken pricing policy.

---

## Benchmark bands
| Leakage % of Bookings | Read |
|---|---|
| Under 2% | Healthy, normal discretionary variance |
| 2%, 5% | Watch, review deal desk approval gates |
| Over 5% | Urgent, margin control breakdown; needs rep-level coaching AND an approval-workflow fix |

## Root-cause checklist
- [ ] Reps don't know or trust their real walk-away price (pair with the Walk-Away Price Calculator)
- [ ] No enforced approval workflow above threshold, self-approval is happening
- [ ] Leakage concentrated at end-of-quarter dates, check by close date
- [ ] Leakage concentrated in a few reps vs. spread evenly: targeted coaching, not a pricing-policy problem
- [ ] Competitive panic discounting without verifying competitor's actual scope
- [ ] Reps default to discounting because it's the only lever they've been trained on (pair with Discount Request Response Scripts)

## Quarterly tracking template

| Quarter | Total Bookings | Total Leakage $ | Leakage % | Points of Margin Bled | Trend vs. prior quarter |
|---|---|---|---|---|---|
| | | | | | |