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Hardware Retailing published the fourth article in its “Inside the Margin” series, in which industry expert Mike Aylen recommends category-specific pricing plans for contractor and professional customers. His guidance includes limiting most customer groups to 10, reviewing allocations at least twice a year and avoiding blanket discounts that can erode margins on low-margin products.
Hardware Retailing has published a new industry viewpoint by Mike Aylen, an industry expert and NHPA strategic consultant, recommending that hardware retailers use customer groups and category-level price plans to attract contractor business without applying unnecessary discounts across their product ranges. The article is the fourth installment in the “Inside the Margin” series and offers operational guidance rather than reporting new sales data or a measured result.
Aylen advises retailers building customer groups from scratch to keep the number to no more than 10 in most cases, with individually tailored plans added where a customer’s volume warrants one. Groups should reflect the retailer’s own market and customer base. His examples include plumbers and painters, with possible additional groups for builders, concrete workers, property maintenance businesses and local councils.
Before assigning a customer to a group, retailers should set criteria based on the customer’s work and purchasing activity. Where sales volume is a factor, Aylen says retailers may create multiple tiers within a trade, such as large, medium and small plumbing accounts, with discount rates tied to monthly sales. He recommends using customer sales reports to review allocations at least twice a year, both to adjust plans and to identify declining sales that may warrant a conversation with the customer.
For new accounts, the article advises against immediately granting the best available terms. Aylen suggests explaining the retailer’s criteria and using a 60- or 90-day trial group so the customer can demonstrate that they meet the requirements for a permanent plan. He also recommends estimating a customer’s potential spending and discussing product categories the customer currently buys elsewhere.
Discount Plans Must Protect Margins
The central point of Aylen’s advice is that a discount that wins one sale can lose money elsewhere if it is applied too broadly. A single percentage off retail across every department may cut prices on products where the retailer has little room to discount, while giving away margin unnecessarily in other categories. The article frames category plans as a way to align customer incentives with the economics of individual departments and products.
Aylen illustrates the risk with examples from retailers he has worked with. He says a 15% global discount for plumbers could undermine returns on hot-water units and other high-value, low-margin items, while the same discount for painters could result in ladders being sold at a loss. These examples are Aylen’s reported observations; the article does not provide supporting transaction data or a quantified estimate of the financial impact.
The approach also links pricing decisions to customer retention and account growth. A retailer can recognize a customer’s loyalty, investigate a decline in purchasing or invite the customer to consolidate more of their routine spending at the store. Whether that produces higher sales or stronger margins depends on the retailer’s costs, product mix and the customer’s response; the article presents these as potential benefits, not guaranteed outcomes.
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From Customer Groups to SKU Rules
Aylen’s process starts with customer segmentation, then moves to setting terms by department and, where needed, by class, fine line or individual stock-keeping unit (SKU). He warns against using a single discount across all departments because category margins and competitive prices differ. Retailers should work out the selling price implied by each proposed discount before loading the plan into their pricing system.
The article names Margin Master and Epicor Pricing Planner as tools that can help retailers examine department pricing, and says an Excel spreadsheet can be used when those programs are not available. Aylen also advises turning off rounding during price-plan analysis so the calculated prices can be checked accurately. His example of a plumbing plan set at cost plus 28% is a caution: he says a clamp was priced at 94 cents under that plan while a major corporate competitor charged $1.64. The comparison is attributed to Aylen, and the source does not identify the product, retailer or date.
For plans with SKU-level exceptions, Aylen says not to lock an item to a fixed price; he recommends assigning an expiration date. That allows a temporary exception to be revisited rather than remaining in place indefinitely. The article does not provide a universal discount schedule, since its recommendations depend on each store’s customers, costs and competitive conditions.
““Limiting the number of customer groups will make it easier to do regular reviews of the activity in each group and make the necessary adjustments when needed.””
— Mike Aylen, industry expert and NHPA strategic consultant, in Hardware Retailing
No Results Data or Discount Benchmarks
The article presents professional recommendations and examples, not a research study or an announcement of a new pricing system. It does not report how many retailers use the approach, measure changes in revenue or gross margin, or compare category plans with other pricing methods. The examples of losses and competitor prices are attributed to Aylen, but no underlying records are provided.
It is also unclear what discount levels would be appropriate for any particular retailer. The source offers no standard rates or cost model, and it does not specify how retailers should balance volume thresholds, loyalty and profitability when those factors point to different customer tiers. Those decisions require store-specific sales, cost and product information.
Retailers Apply and Review Plans
Aylen’s recommended next steps are for retailers to define customer-group criteria, analyze pricing by department and use sales reports to assign accounts. They can then check whether further adjustments are needed at the class, fine-line or SKU level before adding plans to their pricing system or spreadsheet. The article calls for reviews at least twice a year and suggests trial periods for new customers before assigning permanent terms.
For SKU exceptions, Aylen recommends setting an expiration date so the price can be reviewed. The source does not announce a specific follow-up date or a new program launch. Aylen says he plans to cover another topic in a future installment of the “Inside the Margin” series, but does not identify its subject or publication timing.
Key Questions
What does the article recommend hardware retailers do?
Mike Aylen recommends creating customer groups based on trade and purchasing activity, then setting discounts by product category rather than applying one rate across the store. He also advises reviewing customer allocations using sales reports.
How many customer groups does Aylen suggest?
For a program built from scratch, Aylen recommends no more than 10 groups in most cases. He says some high-volume customers may need individual plans in addition to those groups.
How often should customer groups be reviewed?
Aylen recommends reviewing customer sales and group allocations at least twice a year. The article says the review can help identify customers with declining sales and prompt a discussion about the reasons.
Why does Aylen advise against a storewide discount?
Different departments and products have different margins and competitive conditions. Aylen says a blanket discount can cut returns on low-margin items or give customers more of a discount than needed on other products.
Does the article provide proven financial results or standard discount rates?
No. It provides Aylen’s advice and examples from his work with retailers, but no measured results, universal discount schedule or comparison study. Appropriate terms depend on a retailer’s own costs, customers and product mix.
Source: hardwareretailing.com
