Depends on how much rot and what species, cedar I'll send in with less then 25%, anything else I'll try to buck off as much as possible, usually end up losing 5-10' on hemlocks, Doug fir are pretty robust, maple is firewood unless its 24" or bigger and clean, Alder... a little stain is ok, but any rot and its firewood.
The cedars around here are pretty much going to have some rot, so its kind of a given that yer going to need to buck off the first 5' or so at times... though the last few cedar jobs I've done have been pretty good... I guess when the tops get blown out at a young age they harden up a bit?
As far as losing money, guess it depends on how you look at it. Most of my logging jobs are picking up the pieces from bad harvests 15-20 years ago, so a little rot is expected, and you lose some on the scale for defect. But if you pay attention and buck off the crusty bits and leave them behind it works out in the end, only take a few extra minutes to make a log look good to the scalers.
With a little experience and opening yer eyes a guy can learn to see the signs of witch trees are going to have rot, or other damage while cruizing a job, then its a matter of bidding accordingly, but in the end it still kinda sucks to fall a nice fatty only to have it be mostly rotten...