Discounts aren't giveaways—they're payment for the client to take on risk. When a client commits to a large scope or long engagement, they shoulder more uncertainty, so you can charge less. When you guarantee outcomes, you take the risk and can discount. Like how employees earn less than freelancers because their job is stable.
When should you discount your rates? I think of discounting as a way of shifting risk, right? So that if a client is willing to pay for a lot of your service or product or whatever it is, they're basically taking risk off the table for you for a bunch of other sales, either through their commitment or through the scale of the engagement. And that can be worthwhile to you, much like how if you had full-time employment, you'd be willing to accept a lower rate of pay than if you are just a freelancer. Because that employment contains the prospect, at least, of indefinite future income and an indefinite relationship. But if you are thinking about how you can take risk off the table for your customer, that's where you can get paid more. And where the customer is taking risk off the table for you, that's where you, you are willing to take a bit of a pay cut. And that can be a perfectly fair and indeed profit-maximizing way for you to proceed. Ask who's bearing the risk and how you can shift the pricing.
