How to Set a Discount Policy for Your Gallery Salespeople

Every gallery discounts. A collector buys three pieces and expects something off the third; a regular has always had ten percent; a piece has hung for eight months and the wall is worth more than the margin. None of that is a problem. The problem is discovering it afterwards. If your salespeople discount by instinct and you find out when you reconcile the month, three things have already happened: your margin is lower than you planned, your commission is higher than it should be, and nobody can tell you why any particular piece went out at the number it did. This is a policy problem, not a people problem, and it takes about an hour to fix. Decide the number before you need it Pick the most a salesperson may take off without asking. Twenty percent is a common starting point for galleries selling editions and works on paper; galleries dealing in higher value unique work often set it lower, at ten or twelve. The number matters less than it being written down. A salesperson who knows the ceiling negotiates confidently up to it. A salesperson who does not know the ceiling either gives away too much or has to interrupt you on every conversation, and both cost you sales. Two rules worth adding: The ceiling is off the list price, not off the last price. Otherwise a piece that was discounted once drifts down every time it is quoted. Raising a price is never restricted. A ceiling is about protecting margin. If a salesperson can get more, that is the gallery's good fortune. Make approval fast, not formal The reason most discount policies fail is that asking is slower than the sale. A collector standing in your gallery will not wait twenty minutes while somebody finds you. So the request has to reach you where you already are, and it has to carry enough to decide on: Which piece, and what it lists at What is being asked, and the percentage Who is asking Why — three words is enough. "Buying three together." "Been up since March." And critically: nothing changes for the client until you answer. They keep seeing the current price. A discount is not real because somebody requested it. That single rule removes the pressure that makes owners approve things they would not have chosen. In practice this means a push notification and an email, both. The push is what gets seen in the next minute. The email survives being missed and can be read on a phone between other things. Pay commission on the net, not the list This is the part galleries get wrong most often, and it is the one that changes behaviour. If a salesperson earns ten percent of the list price regardless of what the piece actually sold for, discounting costs them nothing and costs you everything. Every negotiation runs one way. Pay commission on what the gallery actually received — after the discount, and before sales tax and shipping, which were never yours. Now a salesperson giving away fifteen percent is giving away fifteen percent of their own commission too. Most of your discount problem solves itself, without a single conversation about it. Two details worth being precise about: Sales tax is not revenue. On a $10,000 piece with 8.375% tax, paying commission on $10,837.50 means paying your salesperson a share of money that belongs to the state. It is small on one sale and not small across a year. Shipping is not revenue either. It is money you forward to a carrier. Record the discount as a discount When the sale reaches your point of sale system or your online store, put the list price on the line and the concession beside it, rather than quietly entering the lower number. It costs nothing and it buys three things. The client sees what they were given, which is worth more than a low price. Your reporting can answer "how much did we discount last quarter", which a lower price cannot. And your commission calculation reads the net automatically, so nobody has to remember to do it by hand. Write down who decided A price that differs from the catalogue with no record of who set it becomes an argument at commission time. Store the number, the person, and the date. You will need it exactly once, and on that day you will be very glad it is there. A workable policy, in five lines 1. Salespeople may take up to X% off the list price without asking. 2. Anything beyond that goes to an owner, who answers on their phone. 3. The client sees the current price until the request is answered. 4. Commission is paid on the net price, before tax and shipping. 5. Every agreed price records who set it and when. That is the whole thing. It fits on a page, it does not slow a sale down, and it means the end of the month holds no surprises. ArtCirq has this built in: a discount ceiling you set, approval by push and email with the request on the owner's dashboard, agreed prices recorded per client, and commission calculated on the net price automatically. It was built for the gallery we run, because we had exactly this problem.