Discounting is lowering the price to win a deal — usually to close a proposal that is stalling or facing a competitor. A little discounting is normal; chronic discounting is a sign of a weak value proposition or weak qualification. Because every dollar off the price comes out of the margin, discounts are usually limited, and managers watch them closely. They also hit your commission and quota, since many plans pay on the discounted value, not the list price.
In plain English
A discount is trading margin for a signature. The question is whether it is a smart trade or a habit. Reps who discount everything train buyers to wait for the markdown; reps who hold price earn the margin and the respect.
Why it matters to you
Discounting is one of the first negotiation levers you control, and it is also the most visible. Before you cut price, add value, restate the cost of inaction, and get the buyer to champion you internally. In an interview, saying "I hold price by staying close to the economic buyer" is far more credible than saying you discount to close.
For negotiating price without giving away margin, see Negotiate Price Without Killing Value.