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Hardware Retailing published a column by industry consultant Mike Aylen on building customer groups and category-specific price plans for contractor and professional customers. Aylen recommends reviewing customer sales regularly and avoiding blanket discounts, which he says can erode margins on some products and price others uncompetitively.
Hardware Retailing has published a column by Mike Aylen, an industry expert and NHPA strategic consultant, advising hardware retailers to use customer groups and category-specific price plans when setting discounts for contractor and professional customers. The guidance centers on balancing sales growth with margin protection rather than applying a single discount across departments.
Aylen’s article is the fourth installment of the publication’s “Inside the Margin” series. He recommends that retailers starting a customer-group system keep it to 10 groups or fewer, with additional individual plans where a customer’s volume warrants one. Groups should reflect the retailer’s market and customer base; examples include plumbers and painters, alongside builders, concrete workers, property maintenance businesses and local councils.
Retailers should define the criteria for each group, Aylen writes, including the customer’s work and, where appropriate, sales volume. He describes one large retailer that divided plumbers into large, medium and small groups based on monthly sales. He recommends reviewing customer activity at least twice a year using sales-by-customer reports, both to adjust allocations and to identify customers whose purchases are declining.
For new customers, Aylen suggests a 60- or 90-day trial group rather than immediately granting the best available deal. He also advises setting discount rates by department and, when needed, by class, product line or individual stock-keeping unit (SKU). The column says retailers can use Margin Master or Epicor Pricing Planner for this work, or calculate rates in Excel. These recommendations are Aylen’s industry guidance; the article does not provide comparative performance data showing how much retailers’ sales or margins change after adopting the plans.
How Discount Design Affects Margins
The advice addresses a practical pricing tension for hardware retailers: contractor discounts may help attract or retain business, but discounts that are too broad can reduce returns on products that already have narrow margins. Aylen’s examples illustrate why one rate may produce different outcomes across departments and customers.
In the column, he says a 15% global discount could leave a retailer struggling to make money on hot-water units and could result in ladders being sold at a loss. He also recounts a plumbing plan set at cost plus 28% that put a clamp at 94 cents, compared with a competitor’s $1.64. Those figures are examples reported by Aylen, not a sector-wide survey or independently verified price comparison.
A structured plan can also give retailers a basis for discussing a customer’s broader purchasing needs. Aylen recommends examining what customers buy, in what quantities, and where purchases may be going elsewhere, then explaining what terms might be available if they direct more business to the store. Whether that approach increases sales or improves margins depends on each retailer’s costs, market and customer response.
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A Series on Contractor Pricing
“Inside the Margin” is presented by Hardware Retailing as a series about growing sales while protecting margin with contractor and professional customers. This installment focuses on how retailers organize accounts before setting discounts: establish customer categories, decide the criteria for membership, then set rates that reflect product economics.
Aylen’s suggested group count is a starting point, not a universal requirement. He says retailers should use their own customer base and market to decide which trades or customer types merit separate groups. Higher-volume customers may need distinct plans beyond the core set, while loyalty may also inform an allocation: he gives the example of a customer who qualifies for a middle group by monthly sales but sends the retailer all of their business.
The article also cautions against fixing SKU-level exceptions at a permanent price. Aylen says exceptions should carry an expiration date and should not be locked to one price, so the plan can be revisited as circumstances change.
“If you are starting this from scratch, I recommend limiting your customer groups to no more than 10.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results and Rollout Details
The source article offers recommendations and examples but does not report a formal study, retailer-wide results or measured changes in gross margin and sales after introducing category price plans. The competitive clamp price and the outcomes described for discounted products are attributed to Aylen’s experience; the supplied material does not identify the retailers or provide supporting records.
It is also unclear how many retailers use the referenced software, what plan designs work best across different markets, or how frequently prices should be recalculated beyond Aylen’s recommendation to review customer allocations at least twice yearly. The column does not give a universal discount schedule, because its argument is that rates should depend on customers and product categories.
Further Advice in the Series
Aylen says the next installment of “Inside the Margin” will address another topic, but the article does not give a subject or release date. For retailers considering the approach, the steps described in this column are to define customer groups and their criteria, review sales information, calculate department-level discounts, and add more specific exceptions only where needed.
Aylen’s proposed review cycle is at least twice a year for customer allocations. He also recommends using trial periods for new accounts and setting expiration dates for SKU-level exceptions. The article does not state whether Hardware Retailing or NHPA will publish templates, follow-up evidence or additional implementation guidance.
Key Questions
What is the article about?
Mike Aylen’s column explains how hardware retailers can group contractor and professional customers, then set discounts by product category rather than applying one rate across the store.
How many customer groups does Aylen recommend?
For a system built from scratch, Aylen recommends no more than 10 core groups. He says retailers may add individual plans for customers whose volume calls for separate treatment.
How often should retailers review customer groups?
Aylen recommends reviewing allocations at least twice a year, using sales-by-customer reports to spot changes such as declining purchases.
Why does Aylen oppose a single discount across departments?
He argues that a blanket rate may cut margins on some products or produce prices that are not competitive on others. His examples include hot-water units, ladders and a plumbing clamp; these are examples from his column, not a general industry study.
Does the article show that these plans increase profits?
No measured results are supplied. Aylen describes the plans as a way to pursue sales growth while protecting margins, but the article does not quantify the financial effect for retailers.
Source: hardwareretailing.com
