SaaS Pricing Optimization: The Discounting Challenge | Krzysztof Szyszkiewicz S5:E12

Written by Mike J Midgley | Sep 30, 2025 8:32:38 AM

Welcome to the final episode of our SaaS Pricing Optimization series on the Force & Friction Podcast, where we break down what really moves the needle in GTM, RevOps, AI, partnerships, and SaaS growth.

Today, we're tackling "The Discounting Challenge" with Krzysztof Szyszkiewicz, founder of Valueships and one of the world's leading SaaS pricing consultants.

This is Part 3 of our comprehensive series, and if you haven't watched

Part 1: The Value Challenge or
Part 2: The Price Setting Challenge

We highly recommend starting with htese earlier episodes as this series builds momentum across all three episodes.

This final installment focuses on the shocking reality of how much money companies are literally throwing away through discounting.

What makes this episode particularly eye-opening is Krzysztof's revelation of "unconscious discounting", where companies give away too much at the same price rather than explicit percentage discounts.

His data reveals that some clients have seen up to 40% of their margin leaking through suboptimal discounting practices, with one client losing almost $140K (MRR) in monthly recurring revenue through discount leakage alone.

We explore the brutal mathematics of discounting (a 15% discount requires 60% more sales just to break even), the counterintuitive correlation between discounting and churn, and the systematic approach to "sealing" discount leakage without destroying your customer base.

Krzysztof Szyszkiewicz

Krzysztof is a certified expert in price, revenue and margin management who specializes in empowering digital companies, including SaaS, e-commerce, and B2B to maximize their revenue through innovative pricing and strategy.

As Partner & Co-founder of Valueships, he's passionate about driving topline growth and unlocking full revenue potential for companies that know there's more money on the table.

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Here are the core areas we discuss in today's episode:

1. The Shocking Mathematics of Discounting: Why 15% = 60% More Sales

Krzysztof opens with the brutal mathematics that most sales teams don't understand about the true cost of discounting.

"Let's imagine that you're selling 1,000 products for $1,000... Let's imagine that your costs are around 60%, which means that your gross margin is around 40%... And then, let's imagine that you decide to discount or to decrease the price by 15% - you need to sell 60% more products just to break even on a 15% discount."

This means selling 1,600 products instead of 1,000 to achieve the same profit. Most sales teams are completely unaware of this margin impact, making discounting decisions that destroy profitability while thinking they're driving growth.

2. Unconscious Discounting: The Hidden Revenue Killer

Krzysztof introduces the concept of unconscious discounting—a more insidious form of margin erosion than explicit percentage discounts.

"Unconscious discounting is when you are giving too much value at the same price. So instead of doing minus 10%, you are adding something on top, and you are not changing the prices, so you are giving, like, the freebies to your customers."

This includes grandfathering (not increasing prices to existing clients) and adding features without price adjustments. While better than explicit discounts, unconscious discounting still destroys margins systematically. The key insight is that discounts aren't inherently bad—they just need to serve a purpose, like annual vs. monthly pricing to improve cash flow and retention.

3. The 40% Margin Leak: Real Data from Client Engagements

Krzysztof reveals shocking real-world data from client engagements showing the scale of discount leakage across SaaS companies.

"We have seen even 40% of margin leaking through suboptimal discounting... The client was leaking almost 140K, monthly recurring revenue at the scale of 8 million, more or less, MRR. So, big, big challenge, right?"

His diagnostic framework is simple: create an Excel spreadsheet with client ID, last payment, current plan, and list price. If the difference between actual payment and list price exceeds 10%, you have a discounting problem. In one example, 86% of clients on Plan C monthly were paying below list price, representing massive margin leakage.

4. The Discounting-Churn Paradox: Why Discounts Increase Customer Loss

Krzysztof reveals the counterintuitive correlation between discounting and higher churn rates, backed by ProfitWell data.

"There is a reel correlation between discounting and churn, so the higher the discount, the higher is probability for churn, when you think about this, it might seem counterintuitive, because you think that you move towards your customer, you give them something, you are very nice to them, and for some reason, they are paying back in churn"

The explanation is logical: customers who push for discounts are typically the most price-sensitive and haven't seen enough value, making them harder to retain. Additionally, discounting makes deal cycles longer, creating a triple negative impact on margin, retention, and sales velocity.

5. The Discount Sealing Process: How to Fix It Without Losing 30% of Customers

Krzysztof provides a systematic framework for "sealing" discount leakage while understanding the acceptable churn threshold.

"Imagine 2000 clients who were discounted, and you want to push them towards the list price... The first step is to understand how many of those customers you can lose and still be profitable from the change."

His analysis shows that companies can typically lose up to 30% of discounted customers and still be profitable from discount sealing, a threshold that's never reached in practice. The implementation takes about a year due to contract cycles, but companies can test different migration strategies: grandfathering with time limits, upsell opportunities during price increases, or forced migrations to appropriate plans.

Final Thoughts

Krzysztof leaves us with the powerful "leaky bucket" analogy that transforms how we think about pricing urgency.

"I was trying to pour the water ino the bucket that has holes in it, it is feasible, you can fill the bucket that is leaking and it still can be full, but it takes 10X much more effort to actually do that."

His final insight positions pricing as the "exercise" of business growth—not immediately urgent like sales or marketing, but creating massive long-term impact when addressed systematically. Just like building muscle is easiest when you're starting versus after 12 years of training, pricing optimization creates the biggest gains when companies finally start treating it as a process rather than a one-off task.

About This Series

This concludes our comprehensive three-part SaaS Pricing Optimization series with Krzysztof Szyszkiewicz. Each episode tackled a specific pricing challenge that's costing SaaS companies millions in lost revenue:

• Part 1: The Value Challenge - Why companies hide their value and how to communicate profit effectively.

• Part 2: The Price Setting Challenge - How to set prices based on willingness to pay rather than guesswork.

• Part 3: The Discounting Challenge (This Episode) - Why discounting is killing margins and how to optimize realized prices.

The data shows most companies have at least 10% untapped revenue potential.

The question is: which challenge will you tackle first?

Don't let another month go by with unconscious discounting bleeding your MRR.The frameworks and methodologies shared across these three episodes provide a complete roadmap for transforming pricing from a painful, ad-hoc task into a systematic growth engine that compounds returns over time.

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Mike Midgley runs a portfolio career, a dynamic hands on digital entrepreneur, founder of the Scrubbing Squad, NXD, strategist, public speaker, Winning by Design certified Revenue Architect and Host at The Force & Friction Podcast.

Mike has achieved multiple exits over a 30+ year career, raised Venture Capital and franchised his businesses 68 times.

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