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Hardware Retailing published the fourth installment of its “Inside the Margin” series, in which NHPA strategic consultant Mike Aylen outlines a category-based approach to pricing contractor and other professional customers. He recommends manageable customer groups, regular sales reviews and discounts calibrated by department rather than a single storewide rate. The article offers industry advice, not reported results from a specific retailer program.
Hardware Retailing has published the fourth article in its “Inside the Margin” series, with NHPA strategic consultant Mike Aylen recommending that retailers set contractor discounts by customer group and product category instead of applying one rate across all departments. The advice is intended to help stores compete for professional customers while avoiding discounts that, Aylen says, can cut into margins on low-margin or high-value products.
Aylen suggests starting with a limited number of customer groups—no more than 10 for a retailer building a plan from scratch, with individual arrangements for some high-volume customers as needed. Groups could reflect trade or activity, such as plumbers, painters, builders or property maintenance firms. Retailers should set clear allocation criteria, which might include the customer’s work and monthly sales. A large retailer Aylen worked with, he says, separated plumbers into large, medium and small groups, with discount rates tied to monthly sales.
He recommends reviewing customer activity at least twice a year, using sales-by-customer reports to adjust group assignments and spot declining purchases. Aylen also advises retailers to estimate a customer’s potential spend and discuss products the customer buys elsewhere. For new customers, he proposes a 60- or 90-day trial group rather than immediately offering the best permanent discount. The customer can then demonstrate whether they meet the retailer’s stated criteria.
Discount rates should be set for each department and, where necessary, broken down further by class, fineline or individual stock-keeping unit. Aylen says retailers can use pricing software such as Margin Master or Epicor Pricing Planner, or prepare calculations in Excel. He gives examples of a blanket 15% discount that could put some plumbing products or ladders below a profitable price, and a plumbing plan at cost plus 28% that priced a clamp at 94 cents when a competitor charged $1.64. These are examples from his consulting experience, not independently verified market comparisons in the supplied report.
How Category Pricing Affects Margins
The article addresses a practical tension for hardware retailers: contractor discounts may help win or retain business, but the same percentage reduction does not have the same effect across products. A storewide rate can be too generous on items with limited margin and unnecessary on products where the retailer has room to compete. Aylen’s approach places discount decisions closer to department-level economics while retaining customer-based incentives.
Regular reviews also connect pricing to customer behavior. A fall in purchases can prompt a retailer to ask why, while information about product gaps can support conversations about winning a larger share of a contractor’s orders. Aylen presents these as ways to develop sales opportunities; the article does not provide measured results showing how much revenue or margin such plans generate.
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The Series’ Contractor Pricing Focus
The piece is the fourth installment of Hardware Retailing’s “Inside the Margin” series. Aylen introduces it as guidance on growing sales and protecting margin among contractor and professional customers through category price plans. The supplied report identifies him as an industry expert and National Hardware Show Association (NHPA) strategic consultant.
Its recommendations are based on Aylen’s professional experience and examples from retailers he says he has worked with. The source does not identify the retailers, provide a study methodology or report performance data. The clamp comparison, discount examples and proposed review schedule should therefore be read as industry guidance and illustrations, not as a formal survey or independently tested findings.
“If you are starting this from scratch, I recommend limiting your customer groups to no more than 10.”
— Mike Aylen, NHPA strategic consultant
Evidence Behind the Pricing Examples
The supplied article does not state its publication date, name the retailers behind Aylen’s examples or provide supporting data on sales, customer retention or margin outcomes. It is therefore unclear how broadly the examples apply across hardware markets or whether the suggested grouping and review practices produce particular financial results. The report also does not specify discount levels that retailers should use; Aylen says rates should be calculated for each business and product category.
Retailers Must Set Their Own Rates
Aylen’s article does not announce a new product, policy or follow-up deadline. Its proposed next steps are for retailers to define customer-group criteria, review sales information, calculate category-specific rates and build the resulting plans into their pricing systems or spreadsheets. The series is expected to continue: Aylen says he will address another topic in a future “Inside the Margin” installment, but the supplied source gives no date or subject for that article.
Key Questions
What does Aylen recommend instead of one discount for every department?
He recommends setting rates by customer group and department, with additional breakdowns by class, fineline or SKU where needed. The goal, in his view, is to avoid applying a discount that is too high for some products or poorly suited to others.
How many customer groups should a retailer start with?
Aylen recommends no more than 10 groups when building a plan from scratch, while allowing that certain high-volume customers may need individual plans in addition to those groups.
How often should customer groups be reviewed?
Aylen recommends reviewing them at least twice a year, using customer sales reports to consider changes in activity and group assignments.
Should new customers receive the best discount immediately?
Aylen advises against doing so. He suggests explaining the retailer’s criteria and using a 60- or 90-day trial group so a new customer can demonstrate whether they qualify for a permanent plan.
Does the article show that these plans increase profits?
No measured profit or margin results are provided in the supplied report. Aylen presents the approach as professional guidance and supports it with examples from his consulting work, but the article does not establish a quantified financial outcome.
Source: hardwareretailing.com
