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Industry consultant Mike Aylen’s latest “Inside the Margin” article recommends that hardware retailers build contractor customer groups and set discounts by product category rather than applying one global rate. His guidance includes reviewing group assignments at least twice a year, using trial periods for new accounts and setting expiration dates for SKU-level exceptions.
Industry consultant Mike Aylen is urging hardware retailers to set contractor and other professional-customer discounts by customer group and product category, rather than applying one discount across all departments. In the fourth article of Hardware Retailing’s “Inside the Margin” series, he outlines a pricing approach intended to support sales growth while limiting avoidable margin loss.
Aylen recommends retailers starting from scratch keep their standard customer groups to 10 or fewer, while allowing separate plans for customers whose sales volume warrants individual treatment. Groups might reflect the work customers do, such as plumbing or painting, or different spending levels within a trade. He advises basing group criteria on the existing customer base and making those criteria clear.
For each group, retailers should examine pricing by department and, where needed, by class, fineline or individual stock-keeping unit (SKU). Aylen cautions that a single discount across departments can cut too deeply into margins on some products and still leave other prices uncompetitive. He says pricing software such as Margin Master or Epicor Pricing Planner can support this work; retailers without those tools can use a spreadsheet.
Aylen also recommends reviewing customer sales information at least twice a year. Those reviews can identify declining purchases and opportunities to discuss customers’ unmet needs. For new customers, he suggests a 60- or 90-day trial group before offering a permanent plan. Any SKU-level exception, he says, should have an expiration date rather than being locked indefinitely at a fixed price.
How Discounts Affect Retail Margins
The guidance addresses a pricing trade-off for hardware stores serving contractors: discounts may help attract or retain business, but their effect varies across products. Aylen’s examples show why a uniform rate can be risky. He says a retailer offering plumbers 15% off across the board could lose money on low-margin, high-value items such as hot water units; the same rate for painters could put some ladder sales below cost.
Category-level plans can give retailers a more specific basis for balancing customer offers and product margins. The article presents this as a method, not as proof that a particular pricing system will improve results. Outcomes depend on each retailer’s costs, prices, customer purchasing patterns and local competition.
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The Series and Pricing Examples
The article is the fourth installment in Aylen’s “Inside the Margin” series. Hardware Retailing identifies him as an industry expert and National Hardware Show Association (NHPA) strategic consultant. The piece focuses on customer-group design and category price plans for contractor and professional customers.
Aylen describes a retailer that divided plumbers into large, medium and small groups using monthly sales, and another that used a cost-plus-28% plan for plumbing items. In the latter case, he says, a clamp was priced at 94 cents while a major corporate competitor charged $1.64. These are examples reported by Aylen, not independently verified market-wide data.
“Do not make the mistake of putting a global discount across all departments because this is too generic and will cost you sales in many areas on commodity lines and margin on others where the discount is too high and unnecessary.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Store Data
The article does not provide a measured estimate of how much category pricing changes sales or margins, or compare results across retailers. Aylen’s cases and price examples are attributed to his experience; the source does not include retailer names, supporting records or an independent assessment of those outcomes.
It is also unclear how retailers should set exact discount levels across different markets or cost structures. The article recommends using sales data and reviewing prices at several product levels, but does not publish a universal pricing formula or a dataset showing what rates will work for a given trade group.
Retailers Put Plans Into Practice
Aylen’s proposed next steps are for retailers to define customer-group criteria, build category-specific discount schedules and assign customers to plans. They can then review sales by customer at least twice a year, adjust group placements and investigate changes in purchasing. The article does not announce a product launch, industry-wide policy or scheduled follow-up date; Aylen says the series will continue with another topic.
Key Questions
What is a category price plan?
It sets discounts for customer groups by product department or category, with further adjustments at the class, fineline or SKU level where needed.
How many customer groups does Aylen recommend?
For retailers building a system from scratch, Aylen recommends no more than 10 standard groups, with individual plans added for customers who warrant them based on volume.
How often should stores review customer groups?
Aylen recommends reviewing customer sales and group assignments at least twice a year, using sales-by-customer reports to spot changes and potential opportunities.
How does he suggest handling a new contractor account?
He suggests placing the customer in a 60- or 90-day trial group and explaining the criteria for moving into a permanent plan, rather than immediately offering the highest discount.
Does the article show that these plans increase profits?
No measured profit or sales results are provided. Aylen presents the plans as a way to manage discounts and pursue additional sales, but retailer outcomes will depend on their own prices, costs and customer activity.
Source: hardwareretailing.com
