Quotations, Price Lists & Discount Control
Margin is rarely lost in one bad negotiation. It is given away in a hundred small concessions that nobody recorded, by people who were doing their best to close a sale — which is why the fix is structural rather than motivational.
Ask a Kenyan business owner where their margin goes and they will usually talk about supplier prices, import costs, or competitors undercutting them. Ask to see the average selling price of their top ten products against list price, and most cannot produce it. The gap between those two facts is the answer to the question.
Discounting is not a discipline problem. Salespeople discount because they are trying to close, and each individual concession is defensible. The problem is that nobody sees the aggregate, so the business negotiates hard with suppliers over two percentage points while giving away five at the counter.
What an uncontrolled quotation actually costs
The arithmetic is unforgiving, and it is worth doing on your own numbers because the result is usually startling.
What a 5% discount really gives away
A five per cent price concession removed a quarter of the profit. To earn back the same total margin you now need to sell a third more units — which is why "we'll make it up on volume" is almost always wrong on thin-margin lines.
On a 20% margin, a 5% discount costs you a quarter of the profit. Nobody would approve that as a decision — but plenty of businesses approve it a hundred times a week as an accident.
The three things that have to exist
You do not need to ban discounting. You need three structural facts, after which discounting becomes a managed commercial lever rather than ambient leakage.
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A price list that is genuinely the default
Prices held as data, applied automatically, and updated deliberately. If the price comes from the salesperson's memory or a spreadsheet on their laptop, there is no list — there is a suggestion.
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Tiers for the customers who deserve them
Volume, wholesale and key-account pricing as defined tiers attached to the customer, so a distributor gets distributor pricing automatically and does not need to negotiate it every order.
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Discount authority granted to named roles
Anything below the tier price requires authority. Not a warning, not a note — authority, granted to specific people up to specific limits, and recorded when used.
The second point does more work than people expect. Most improvised discounting happens because the customer genuinely deserves a better price and there is no structured way to give it to them, so it gets negotiated ad hoc every single time — inconsistently, and differently depending on who answers the phone. Tiers convert that into a decision made once.
Quotation, not conversation
A quotation that exists as a typed document is a record of what somebody offered. A quotation that exists in the system is a priced offer with a validity period, a discount trail, and a straight path into an order and then an invoice — so what was quoted is what gets billed.
Quotes as documents
- Prices typed by hand, from memory or an old file
- Discounts invisible in aggregate; nobody knows the average selling price
- No validity, so a quote from four months ago is honoured at today's cost
- The invoice is re-typed and quietly differs from the quote
- "Margin by customer" is a question nobody can answer
Quotes as records
- Prices applied from the list and the customer's tier
- Every departure from list attributed to whoever authorised it
- Validity dates, so stale quotes expire rather than being honoured
- Quote becomes order becomes invoice, so billing matches the offer
- Margin by customer, product and salesperson is a report
That validity point causes real losses in Kenya specifically, because imported cost bases move. A quotation issued three months ago at a landed cost that has since changed is a commitment made at a price you can no longer supply profitably — and honouring it feels like good service right up until you calculate it. Quotes should expire, and expiry should be automatic rather than remembered. The landed-cost mechanics behind this are in landed costs on imports.
What to measure once it exists
The point of the structure is that three questions become answerable, and all three tend to change behaviour immediately.
The three reports that change conversations
- Average selling price against list, by product — your real discount rate, which is almost always higher than anyone estimates
- Margin by customer — which reliably reveals one or two accounts that are large, demanding, and unprofitable at the terms they receive
- Margin by salesperson — not to punish anyone, but because discounting behaviour varies enormously between people selling the same thing
- Discount authorisations by approver and value, so you can see whether authority is being used or routed around
- Quote-to-order conversion by discount level — often showing that deeper discounts did not actually win more work
- Expired quotes still being honoured, which is a policy question rather than a pricing one
The uncomfortable finding to expect
Nearly every business that runs margin-by-customer for the first time discovers that one significant account is unprofitable. It is usually a large, demanding customer everyone is proud to have, whose terms were agreed years ago and never revisited. The report does not tell you to drop them — it tells you the conversation you have been avoiding is a commercial one, not a relationship one.
What we do and do not do
What AWRA OpsHub does today
- Price lists as data, applied automatically rather than typed.
- Customer price tiers, so structured pricing does not need renegotiating per order.
- Discount authority by role and limit, enforced rather than advisory.
- Quotations with validity dates, converting into orders and then invoices without re-keying.
- Margin reporting by product, customer and salesperson.
- Landed cost feeding the cost side, so margin is measured against real cost rather than an assumed one.
What it does not do
- We do not set your prices or recommend a pricing strategy.
- We do not do dynamic or competitor-based pricing — no market price feeds, no automated repricing.
- We do not model price elasticity. We tell you what discounting cost you; predicting what a price change would do to demand is your judgement.
- We are not a CPQ engine for highly configured products with complex option-dependent pricing.
Any pricing practice must comply with applicable competition and consumer-protection law. Confirm your position with your advocate.
Where to start
Get the price list into the system and make it the default, before anything else. Then add tiers for the customers who already receive better prices informally — that is not a new concession, it is formalising one you are already granting. Only then introduce discount authority, because introducing approval limits before tiers exist means everyone hits the approval wall constantly and the control gets abandoned within a fortnight.
The wider chain from quote to collection is in sales software in Kenya, and the collection end in receivables and collections.
Our take
Put the price list in the system, tier the customers who already get better prices, then require authority to go below tier. Run margin by customer once and be ready for one uncomfortable answer. This is the cheapest margin improvement available to most Kenyan businesses, because it requires no new sales, no supplier negotiation and no price increase — only that you stop giving away what you did not decide to give away.
See what discounting really costs you
Price lists applied automatically, customer tiers, discount authority by role, quotes with validity that convert straight to invoices, and margin by customer and product.
Explore quotations & pricingFrequently asked questions
Should we stop discounting altogether?
No — discounting is a legitimate commercial lever and banning it usually just moves the concession somewhere less visible, like free delivery or extended terms. The aim is that a discount is a decision made by someone with authority and recorded, rather than an ambient practice nobody can quantify. Once you can see your real average selling price against list, you can decide how much discretion to grant and to whom.
Why does a small discount hurt margin so much?
Because the discount comes entirely out of margin while cost stays fixed. On a 20% margin, a 5% price cut removes a quarter of the profit, and you would need roughly a third more volume to recover the same total margin. That is why "we will make it up on volume" is usually wrong on thin-margin lines — the extra volume required is far larger than most people intuit, and it often comes with proportionally more cost to serve.
How do price tiers differ from discounts?
A tier is a structured price attached to a customer because of what they are — a distributor, a wholesale account, a volume buyer — applied automatically on every order. A discount is a departure from whatever price applies. Most improvised discounting exists because deserving customers have no tier, so the better price gets renegotiated ad hoc every time, inconsistently and depending on who answers. Tiers turn that into a decision made once.
Should quotations expire?
Yes, and automatically rather than by memory. This matters especially where your cost base is imported, because a quote issued months ago was priced on a landed cost that may have moved since. Honouring a stale quote feels like good service until you calculate it, and by then the commitment has been made. Set a validity period appropriate to how fast your costs move and let the system enforce it.
What is the first report to run?
Margin by customer. Almost every business running it for the first time finds at least one significant account that is unprofitable at its current terms — typically a large, demanding customer whose pricing was agreed years ago and never revisited. The report does not tell you what to do about it, but it converts a vague sense that a relationship is hard work into a specific commercial number you can act on.
