> For the complete documentation index, see [llms.txt](https://docs.peakcommerce.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.peakcommerce.com/product/rules-and-customizations/rules-overview/protecting-margin-with-policies.md).

# Protecting Margin with Policies

The **Policy Engine** is where you set the guardrails on commerce actions. A policy watches for one kind of change — a discount, a downgrade, a seat change, a cancellation — and returns a decision: **allow**, **warn**, **require approval**, or **block**, with a reason. Your team moves fast, and the rules keep margin from quietly leaking away.

This walkthrough builds two guardrails live.

{% embed url="<https://youtu.be/zHw0v6YU3uk>" %}

**Where to find it**

Go to **Rules & Automation → Policy Engine**. Policies are evaluated top to bottom by priority, and the first block-severity match stops the action.

**Build a discount cap**

1. Select **Add Policy**, then choose the **Discount Cap** type.
2. Name it, and set the **Maximum Discount** — for example, 15%.
3. Choose the enforcement action. **Require Approval** lets the deal proceed but routes anything over the cap for a manager's sign-off, so nothing stalls and nothing slips through.
4. Save. From now on, discounts above the cap route for approval automatically.

**Protect revenue on downgrades**

1. Add another policy and choose **Downgrade Protection**.
2. Set the **MRR Impact Threshold** — the monthly recurring revenue a downgrade would have to exceed before the policy fires (for example, $5,000).
3. Leave enforcement on **Block** to stop high-value downgrades outright above the line, or use **Require Approval** to review them first.
4. Save. High-value downgrades now stop for review before they ever take effect.

**Enforcement actions**

* **Allow** — no restriction.
* **Warn** — allow, but surface a warning.
* **Require Approval** — allow, pending a manager's sign-off.
* **Block** — prevent the action outright.

> **Tip:** Policies apply across every channel — storefronts, CSR flows, and AI agents all honor the same guardrails, so a discount cap set once holds everywhere.

**Learn more:** [Rules Overview](/product/rules-and-customizations/rules-overview.md) · [Creating and Managing Rule Sets](/product/rules-and-customizations/rules-overview/creating-and-managing-rule-sets.md).


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