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Mike Aylen, writing in Hardware Retailing’s “Inside the Margin” series, advises hardware retailers to build customer groups and set contractor discounts by department rather than applying one global rate. His recommendations include reviewing customer activity at least twice a year, testing new-customer offers, and using expiration dates for SKU-level exceptions.
Hardware Retailing has published a pricing strategy article by Mike Aylen, an industry expert and NHPA strategic consultant, advising hardware retailers to organize contractor and professional customers into groups and tailor discounts by product category. The approach is intended to help stores pursue more customer spending while avoiding broad discounts that can cut margins on products with limited pricing room.
Aylen’s article is the fourth installment in the publication’s “Inside the Margin” series. It recommends starting with a manageable set of customer groups, generally no more than 10, while allowing additional plans for customers whose volume warrants individual treatment. Retailers should define group criteria using their own customer base and market. Possible groups include plumbers, painters, builders, concrete workers, property maintenance businesses and local councils.
Group membership can reflect a customer’s work, sales volume or both. Aylen describes a large retailer that separated plumbers into large, medium and small groups, with discount rates tied to monthly sales. He also argues that sales figures can help identify loyal customers who merit stronger terms even if they do not meet a volume threshold, and customers whose declining purchases may warrant a conversation about their needs.
After establishing groups, Aylen advises setting rates by department and, where necessary, by class, fineline or individual stock-keeping unit (SKU). He warns against applying one discount across every department, saying it can reduce margin unnecessarily or make some items unprofitable. Retailers can use pricing tools such as Margin Master or Epicor Pricing Planner, or calculate rates manually in Excel, according to the article. Aylen also recommends putting expiration dates on SKU-level exceptions rather than locking them at a fixed price.
Discounts Must Match Product Margins
For retailers selling to contractors, the advice highlights a tension between offering attractive prices and preserving profit on each sale. A single discount rate can affect departments very differently: a reduction that is manageable on one product may leave little room on a high-value, low-margin item or push another product below a competitor’s price.
Aylen gives examples from his consulting work to illustrate the risk, not as independently verified industry-wide data. He says a retailer’s 15% global discount could make it difficult to earn money on hot-water units bought by plumbers or lead to losses on ladders bought by painters. He also describes a plumbing plan set at cost plus 28% that resulted in a clamp selling for 94 cents, compared with a competitor’s $1.64. The examples show why he recommends checking prices at a more detailed level before implementing a plan.
The method also makes pricing a tool for customer management, not only a point-of-sale discount. Regular reviews can help retailers respond to changes in purchasing, recognize loyalty and discuss opportunities to win a greater share of a contractor’s business. Those are potential benefits presented by Aylen; the article does not quantify the sales or margin results retailers can expect.
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How Customer Plans Are Set
The article presents a process rather than a new pricing product or a change to retail policy. Retailers first choose customer groups and establish how customers qualify. They then examine purchasing by customer and department, set discounts that fit the economics of the products, and assign customers to the plans. Aylen recommends reviewing sales information and allocations at least twice a year, using reports organized by customer.
For new customers, he suggests avoiding the automatic offer of the best permanent discount. Instead, a retailer can explain its criteria and use a 60- or 90-day trial group to see whether the customer meets them. The article names Margin Master and Epicor Pricing Planner as tools that can help model selling prices, but says spreadsheet calculations are another option. It does not compare software features or provide a sample pricing plan in the supplied text.
““The main advantage is that you can use it to grow sales.””
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Store Data
The article offers expert recommendations and examples from Aylen’s consulting work, but does not provide a controlled comparison, retailer-wide survey or measured results showing how much the proposed plans increase sales or margins. The supplied source also does not state the article’s publication date, identify the retailers in its examples, or give the underlying costs and pricing details needed to independently assess those cases.
It is also unclear how retailers should set particular discount thresholds for their own stores. Aylen says the criteria and rates should reflect each retailer’s customers, sales information and product economics; he does not prescribe universal rates or a standard method for estimating a contractor’s potential monthly spend.
Review Plans Against Sales
Aylen’s recommended next step for retailers following the approach is to build customer groups from existing sales records, calculate category-level prices, and assign customers to appropriate plans. Retailers can then review sales and allocations at least twice yearly, investigate declining activity and adjust rates or group placement when the data supports a change.
For new accounts, a trial period can give the retailer time to see whether a customer meets the stated criteria before assigning a permanent plan. The article says Aylen plans to cover another topic in a future “Inside the Margin” installment, but it does not give a date or subject for that article.
Key Questions
What is the article’s main recommendation?
Aylen recommends organizing contractor and professional customers into groups, then setting discounts by department—and by more specific product levels where needed—rather than using one rate across the store.
How often should retailers review customer groups?
Aylen recommends reviewing customer sales and group allocations at least twice a year, using reports organized by customer.
How should a retailer handle a new contractor account?
The article suggests explaining the retailer’s qualification criteria and using a 60- or 90-day trial group before granting a permanent discount plan.
Does Aylen provide a standard discount rate?
No. He says discount rates should be developed for the retailer’s customer groups and product categories. The article’s examples warn against assuming one rate will suit every department.
What evidence does the article give that the plans improve margins?
The supplied article describes examples from Aylen’s work with retailers and presents his recommendations, but does not report a measured, general increase in sales or margins.
Source: hardwareretailing.com
