In short

  1. 1. Do not stop at headline gross marginA deal can meet the discount rule and still be economically weak. Add expected delivery effort, specialist capacity, custom integration, service credits, transition cost, payment timing and probable change friction.
  2. 2. Build a simple margin bridgeStart with contracted revenue. Subtract standard delivery cost. Then make the non-standard items explicit: extra implementation effort, bespoke engineering, higher support coverage, SLA buffers and commercial concessions that affect cash.
  3. 3. Stress the assumptionsAsk what happens if implementation takes 25% longer, specialist utilisation is higher than planned, payment slips, or service credits are triggered. You do not need a perfect model. You need to know which assumptions carry the deal.
  4. 4. Make the trade-off visibleIf the economics only work under a narrow set of assumptions, that is a decision fact. It may still be a good strategic deal, but it should be approved because leaders chose the trade-off—not because the trade-off stayed hidden.

Do not stop at headline gross margin

A deal can meet the discount rule and still be economically weak. Add expected delivery effort, specialist capacity, custom integration, service credits, transition cost, payment timing and probable change friction.

The right question is not “is the discount allowed?” It is “what economics are we buying with this promise?”

Build a simple margin bridge

Start with contracted revenue. Subtract standard delivery cost. Then make the non-standard items explicit: extra implementation effort, bespoke engineering, higher support coverage, SLA buffers and commercial concessions that affect cash.

A simple bridge is often enough to show where the economics changed.

Stress the assumptions

Ask what happens if implementation takes 25% longer, specialist utilisation is higher than planned, payment slips, or service credits are triggered. You do not need a perfect model. You need to know which assumptions carry the deal.

Make the trade-off visible

If the economics only work under a narrow set of assumptions, that is a decision fact. It may still be a good strategic deal, but it should be approved because leaders chose the trade-off—not because the trade-off stayed hidden.

Revenue is not the same as economic value. The promise determines how much of the revenue survives.