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In a Hardware Retailing industry viewpoint, Mike Aylen recommends that hardware retailers set contractor discounts by customer group and product category rather than applying one discount across departments. His guidance includes reviewing customer sales at least twice a year, using trial periods for new accounts and putting expiration dates on SKU-level exceptions.
Hardware Retailing has published a new industry viewpoint by Mike Aylen, an industry expert and NHPA strategic consultant, advising hardware retailers to set contractor discounts by customer group and product category. The article argues that tailored plans can help retailers pursue sales while limiting margin losses that may result from broad discounts.
Aylen recommends starting with clear customer groups based on the retailer’s market and the work customers do, such as plumbing, painting, building or property maintenance. For a program built from scratch, he suggests keeping the number of general groups to no more than 10, with separate plans for particularly high-volume accounts where needed. He says retailers should define allocation criteria, which might reflect customer activity, monthly sales or both.
Groups can also distinguish customers by sales level. Aylen describes a retailer that divided plumbers into large, medium and small groups, with discounts tied to monthly sales. He says customer reports can support allocation decisions and reviews, which he recommends conducting at least twice a year. If a customer’s purchases decline, the retailer can use that information to ask why and discuss ways to win more of the customer’s business.
For new customers, Aylen advises against immediately offering the highest discount. Instead, he suggests explaining the requirements for permanent group membership and using a 60- or 90-day trial period to see whether the relationship meets those criteria. Once groups are established, discounts should be calculated separately by department and, where necessary, by class, fineline or individual product, rather than applying one rate across the store.
How Category Pricing Can Protect Margins
The guidance addresses a tension for hardware retailers serving contractors: discounts may help attract and retain business, but the same percentage reduction can have very different effects across products. Aylen warns that a blanket 15% discount could leave little profit on lower-margin, high-value plumbing products or cause ladder sales to fall below cost. These examples are from his experience and are not presented as an industry-wide measurement.
Category-level plans give retailers a way to set different rates where product economics differ, while customer tiers can link better terms to sales activity or loyalty. Aylen also frames customer data as a tool for identifying products a contractor may be buying elsewhere and opening a conversation about earning more of that business. The article offers operational advice, not evidence that any particular pricing method will produce a specified increase in revenue or profit.
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From Customer Groups to Product-Level Rates
The article is the fourth installment in Hardware Retailing’s “Inside the Margin” series, which Aylen says focuses on growing sales and protecting margins among contractor and professional customers. It moves from customer classification to the discounts applied across merchandise categories.
Aylen says retailers using Margin Master or Epicor Pricing Planner can use those tools to examine selling prices by department; he also suggests doing the calculations manually in Excel. His recommended sequence is to set group criteria, calculate rates by department, check whether narrower product breakdowns are needed, then build the plans into the retailer’s system and assign customers. For individual SKU exceptions, he cautions against fixing the price indefinitely and recommends setting an expiration date.
““The main advantage is that you can use it to grow sales.””
— Mike Aylen, industry expert and NHPA strategic consultant
Evidence Behind the Pricing Advice
The article presents Aylen’s recommendations and examples from his work with retailers; it does not provide a controlled comparison, broad industry data or quantified results showing how much the proposed plans change sales or margins. The source also does not identify the retailers in the examples or provide a date for publication. It is unclear how widely retailers use these approaches or how outcomes vary by market, supplier terms and local competition.
Retailers’ Review and Adjustment Cycle
Aylen’s recommended next steps are for retailers to define customer-group criteria, calculate discounts by department and narrower product levels where appropriate, and assign customers to the resulting plans. He advises reviewing sales information at least twice a year, revisiting customer allocations when purchasing patterns change and using trial periods before granting new accounts permanent terms. The article says Aylen plans to address another topic in a future “Inside the Margin” installment, but gives no subject or publication date.
Key Questions
What pricing approach does Mike Aylen recommend?
He recommends setting discounts by both customer group and product category, rather than applying one rate across all departments.
How many customer groups should a retailer start with?
For a program built from scratch, Aylen suggests no more than 10 general groups. He says very high-volume customers may need separate plans in addition to those groups.
How often should customer group assignments be reviewed?
Aylen recommends reviewing sales activity and allocations at least twice a year, using sales-by-customer reports to spot changes such as declining purchases.
How should retailers handle discounts for new customers?
Aylen advises explaining the criteria for permanent group membership and considering a 60- or 90-day trial period, rather than automatically giving a new customer the highest discount.
What does the article say about SKU-level price exceptions?
Aylen says retailers should not lock an exception to a fixed price indefinitely. He recommends attaching an expiration date to the exception.
Source: hardwareretailing.com
