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In a Hardware Retailing industry viewpoint, consultant Mike Aylen recommends that hardware retailers build customer groups and set contractor discounts by product category rather than applying one discount across the store. He says regular sales reviews, trial periods for new accounts and dated SKU exceptions can help retailers pursue sales while limiting margin risk.
Hardware Retailing has published a new installment of its “Inside the Margin” series, in which industry expert and NHPA strategic consultant Mike Aylen lays out a method for setting category-specific prices for contractor and professional customers. His central recommendation is to avoid applying one blanket discount across departments, because the same rate can cut margins sharply on some goods while leaving other prices uncompetitive.
Aylen advises retailers starting customer segmentation to keep the number of standard groups to 10 or fewer, with separate plans for exceptional high-volume accounts where needed. The groups should reflect the retailer’s own customer base and market. Possible categories include plumbers, painters, builders, concrete workers, property maintenance firms and local councils. Retailers should define allocation criteria, such as the customer’s work, sales volume or other evidence of business activity.
One example in the article is a retailer that divided plumbers into large, medium and small groups, setting discount rates according to monthly sales. Aylen also says loyalty can inform decisions: a customer whose sales place them in a middle tier may merit higher discounts if they consistently bring all their business to the store. He recommends reviewing customer sales at least twice a year, using reports to identify changes and prompt conversations with customers whose purchases are declining.
For the price plans themselves, Aylen recommends calculating discounts separately by department, and, where appropriate, narrowing them further to a class, fineline or individual stock-keeping unit. He says retailers can use pricing tools such as Margin Master or Epicor Pricing Planner, or work through the calculations in Excel. New accounts can be placed in a 60- or 90-day trial group before receiving a permanent plan. For SKU-level exceptions, his advice is to avoid fixed prices without an expiration date.
How Category Pricing Can Protect Margins
The article addresses a practical tension for hardware retailers: contractor discounts may help win or retain business, but a rate that works for one product category can undermine earnings in another. Aylen’s examples show why a store-wide percentage can be risky. He says a 15% global discount could leave little room on low-margin, high-value plumbing products or result in ladders being sold at a loss.
Category plans also give retailers a structured way to connect pricing to customer activity. Sales reviews can identify accounts with growth potential or declining purchases, while conversations about a customer’s unmet needs may help the store compete for a larger share of that customer’s spending. These are recommendations from Aylen, not reported results from a controlled study; the supplied article does not quantify the effect on sales or margins.
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From Customer Groups to Product Prices
The piece is the fourth article in Hardware Retailing’s “Inside the Margin” series. Aylen presents category pricing as a sequence: identify customer groups, set transparent criteria for placement, calculate suitable discounts by product area, and assign customers to the resulting plans.
His examples illustrate the limits of broad rules. In one case, Aylen says a retailer used a cost-plus-28% plan across plumbing items and priced a clamp at 94 cents, while its main corporate competitor charged $1.64. He uses the comparison to argue for checking prices item by item; the article does not identify the competitor or provide wider market data.
““Do not make the mistake of putting a global discount across all departments.””
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Retailer Data
The supplied article sets out Aylen’s approach but does not report an independent evaluation, overall margin gains, sales growth figures or the number of retailers using these plans. It also does not provide the date of publication or the pricing-plan example referenced in the text. The proposed group sizes, review schedule and trial periods are advice rather than universal requirements; how well they work will depend on each retailer’s costs, customers and competitive market.
Details such as the margin impact of the clamp example and the precise criteria for each customer tier are not supplied. Retailers would need their own sales and cost data to determine appropriate discounts and confirm that a plan remains financially sound.
Retailers Would Review and Adjust Plans
Aylen’s recommended next steps are for retailers to build groups from current customer data, calculate category-level discounts, and enter the plans into their pricing system or an Excel spreadsheet. They would then allocate accounts, monitor sales, and review the groups at least twice a year, adjusting placements or rates where customer activity changes.
For new customers, his suggested 60- or 90-day trial offers a period to test whether agreed criteria are being met before a permanent discount is assigned. The source does not announce a specific follow-up date or report a retailer’s results; Aylen says the series will cover another topic in a subsequent article.
Key Questions
What is the article’s main recommendation?
Mike Aylen recommends setting contractor discounts by customer group and product category, rather than applying one discount across every department.
How many customer groups does Aylen recommend?
For retailers starting from scratch, he recommends keeping standard groups to no more than 10, with separate arrangements for exceptional high-volume customers if necessary.
How often should retailers review customer allocations?
Aylen recommends reviewing sales and group placements at least twice a year, using customer sales reports to spot changes.
How should retailers handle a new contractor account?
Aylen suggests explaining the criteria for a permanent plan and considering a 60- or 90-day trial group before offering the best discount tier.
Does the article show that category plans increase profits?
No measured results are provided in the supplied article. Aylen presents category pricing as a way to pursue sales while protecting margins, but the source does not quantify its financial impact.
Source: hardwareretailing.com
