Punishment for Grades

It's getting to be that time again and now that we are a Blended Family in the truest sense, I was wondering if some of you blended parents might chime in on the whole grades/report card issue.

What sort of punishments do you dole out for bringing home grades that are below the child's true potential?

I say "true potential" because we have a couple of children that work their tails off for a C average. Confirmed by teachers and tests.

Just wondering - because hubby says I'm too soft sometimes.