This article also appeared on Forbes.com

At many large SaaS companies, sales leaders are responsible for holding the line on discounts during the sales process.

There’s a time and place for offering discounts—usually, it should be a last resort because it can lead to significant profit margin erosion.

My experience has shown me that it’s generally a myth that putting deep discounts on the table in the SaaS world drives faster sales and customers to buy more. When a SaaS sales team is at a point where it’s offering a deep discount to a prospect, the prospect is usually hesitant to begin with and doesn’t value the product that much. The prospect might take the offer, only to likely churn with time once they find a cheaper price somewhere else.

Instead of pulling the discount lever first, SaaS sales leaders should consider leveraging other strategies, specifically, smart contract strategies, to secure closed-won deals.

1. Commercial And Contract Flexibility

An effective strategy SaaS sales leaders can explore early on is commercial and contract flexibility. This can take various forms.

Flexible payment terms can be a significant benefit to customers. Typically, the standard payment term at SaaS companies is net 30. By extending that to 45 or even 90 days, sales teams can enable customers to hold onto their money longer, which helps them with cash flow.

Sales leaders can also look into ramping up deals with lower initial commitments that increase over time. For example, a customer could commit to a certain level of usage in the first year of the contract that increases in year two and reaches its peak in year three, the final year of the commitment.

True-up periods for adoption without overage charges can be another effective strategy for sales leaders to consider. Essentially, customers get a grace period to adopt a software solution without overage charges—and in turn, can get a sense of their actual usage and then possibly increase their commitment level down the line.

Then there is the option of early termination. Customers can choose to terminate their contracts early, albeit with a penalty. As a caveat, I believe SaaS sales leaders should pull this lever cautiously and only for strategic customers that the company would particularly benefit from getting on board. Additionally, startup SaaS companies will likely find this approach more relevant than larger, more established ones.

Finally, SaaS leaders, particularly those at startups, can give customers the choice to opt out of auto-renewal. That way, customers won’t feel quite as locked in.

2. Package And Usage Flexibility

SaaS sales leaders can also offer customers package and usage flexibility.

For one, they can provide customers with increased quota allocation for a given time period, such as in the first year. In the first year of a three-year contract, for example, a customer could receive a certain number of extra seats or an increased amount of storage at no additional cost.

Flex commits are another lever sales leaders can pull if they’re at a company that requires storage from a hyperscaler underneath. Essentially, they can give customers the flexibility to draw down their commitment across any of the major cloud providers rather than being locked into a single one. SaaS sales leaders can also give customers the ability to roll over unused commits to future periods.

3. Customer Enablement

By providing customer enablement services, SaaS sales leaders can help customers feel like they are getting more value out of software products.

One way to do so involves providing customers with free add-ons such as product training, professional services (such as data migration and custom configurations), success plans (such as helping customers pinpoint specific performance goals) and certifications. However, sales leaders should be mindful that while customers don’t get charged for these add-ons, they still involve time and money on the back end and thus cut into the product’s profits.

Another key customer enablement effort is to provide roadmap reviews. Customers can have their executives join a call with the SaaS company’s team, and the SaaS company’s leadership will give the executives a review of what’s ahead in terms of product features. That way, customers can plan accordingly.

4. Strategic Partnerships

By forming strategic partnerships with customers, SaaS companies can give them opportunities to influence the product roadmap and more.

SaaS sales leaders can invite customers to join product advisory boards. Whenever product advisory boards meet, customers can share their thoughts on the future of the product. By being members of product advisory boards, customers can also get early access to beta features. They can help shape how those features evolve up to the time of release.

Sending invites to customer reference programs is another impactful tool sales leaders can leverage. Being a member of a customer reference program can offer various benefits to customers, including invitations to speak at a software company’s conference and having case studies written about them that are featured on the company’s website.

5. Procurement-Focused Offerings

This lever, procurement-focused offerings, applies to customers with procurement teams.

Procurement professionals usually seek price protection guarantees, which SaaS sales leaders can provide. That way, procurement professionals have peace of mind that they won’t face price hikes during a fixed term and will be more likely to sign on the dotted line.

Frequently Offering Discounts, Especially Deep Discounts, Can Signal A Bigger Problem

If SaaS sales leaders frequently provide discounts, especially deep discounts, it can signal a bigger problem—usually, something is wrong with the SaaS company’s list price and how it was established, and it needs to be revisited.

However, by implementing these smart contract strategies first, sales leaders can provide customers with pathways to gain more value, without compromising the company’s bottom line. Typically, customers who truly value a product will work with a software company to find mutually beneficial terms.