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In a Hardware Retailing industry viewpoint, NHPA strategic consultant Mike Aylen outlines a method for hardware retailers to set category-specific prices for contractor and other professional customers. He recommends limiting customer groups, reviewing them at least twice a year, and tailoring discounts by department rather than applying one storewide rate. The article offers industry advice, not evidence that the approach has produced measured results across retailers.
Mike Aylen, an industry expert and National Hardware Show Association strategic consultant, has published the fourth article in Hardware Retailing’s “Inside the Margin” series, recommending that hardware retailers use customer groups and department-specific price plans to manage discounts for contractors and other professional buyers. His central advice is to avoid one discount across every department, which he says can reduce margins on some products without being needed to win sales.
Aylen recommends starting with customer groups built around the retailer’s market and the work customers do. Examples include plumbers and painters, alongside builders, concrete workers, property-maintenance businesses and local councils. For a retailer setting up groups from scratch, he advises keeping the number to 10 or fewer, with exceptions for individual high-volume accounts where needed. He says fewer groups make regular reviews and adjustments easier.
Retailers should define the criteria for each group, including whether assignment depends on a customer’s day-to-day activity, sales volume or both. Aylen describes one retailer dividing plumbers into large, medium and small accounts based on monthly sales. He recommends using customer sales reports to check allocations at least twice a year, identify declining sales and discuss with customers why their purchases may have changed.
Once groups are in place, Aylen advises setting discounts by department, and narrowing them to a class, product line or individual stock-keeping unit when needed. He says retailers can use pricing tools such as Margin Master or Epicor Pricing Planner for this work, or build a plan in Excel. He also cautions against immediately offering new customers the best available terms: instead, he suggests a 60- or 90-day trial group while the customer demonstrates that they meet the criteria for a permanent plan.
Why Department-Level Discounts Matter
For retailers selling across many product categories, a discount that looks simple at the customer level can have very different effects on individual products. Aylen’s examples illustrate the risk: he says a 15% storewide discount could leave little profit on hot-water units bought by plumbers or cause losses on ladders sold to painters. Those are examples from his experience, not a claim that every retailer or product will have the same result.
His proposed approach asks retailers to weigh the commercial value of a customer relationship against the cost of each discount. A plan can reward loyalty or encourage a buyer to purchase more of their routine supplies from one store, while closer category-level checks may help prevent discounts from being unnecessarily large on products with little room for them. The article does not provide sales data or a measured margin improvement, so the business impact will depend on each retailer’s prices, costs and customer behavior.
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Inside the Margin Series
The article is the fourth installment of Hardware Retailing’s “Inside the Margin” series. Aylen frames category pricing as a way to grow sales and protect margins among contractor and professional customers. The piece is an industry viewpoint based on his recommendations and examples, rather than a reported study comparing retailers that use these plans with those that do not.
Aylen also warns against treating a simple cost-plus formula as sufficient for every item. He recounts a retailer pricing all plumbing products at cost plus 28%; in his example, that produced a 94-cent clamp price while a major competitor sold the item for $1.64. He uses the comparison to argue for checking actual selling prices across categories instead of assuming that one markup or discount works throughout a department.
“Do not make the mistake of putting a global discount across all departments because this is too generic and will cost you sales in many areas on commodity lines and margin on others where the discount is too high and unnecessary.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Local Pricing
The article does not report how many retailers use the approach, whether any specific retailer has improved margins through it, or how much sales or profitability changed. It also does not provide a universal discount schedule: Aylen says rates should be calculated using each retailer’s departments, products and customer base. The examples are presented as cases he has encountered, and the source does not independently verify their details or provide dates for them.
It is also unclear which customer-group criteria will work best in different markets. Sales volume, customer loyalty and the type of work a buyer performs are possible inputs, but the article leaves retailers to decide how to weigh them and how to define eligibility. No specific future publication date for the series’ next installment is given.
Review Plans and Track Exceptions
Aylen’s recommended next steps are to define customer groups, calculate discounts at the department level, and use sales reports to review group assignments at least twice a year. Retailers can then adjust rates or eligibility based on customer activity and the pricing of particular products. For new accounts, he proposes a 60- or 90-day trial before permanent placement in a group.
For plans that include individual product exceptions, Aylen advises adding an expiration date rather than locking in a fixed price indefinitely. The source does not identify a scheduled industry response, a retailer-wide rollout or a date for his next article; the practical next developments will depend on whether and how individual stores adopt the recommendations.
Key Questions
What is a category price plan?
In Aylen’s article, it is a pricing approach that assigns customer groups discounts that can vary by department, class, product line or individual item, instead of applying the same rate to all purchases.
How many customer groups does Aylen recommend?
For retailers starting from scratch, he recommends no more than 10 groups, while allowing for individual plans for some high-volume customers.
How often should retailers review customer groups?
Aylen recommends reviewing allocations at least twice a year, using customer sales reports to identify changes such as declining purchases.
Why does he advise against a single storewide discount?
He says the same discount can have different effects across products: it may be too large on low-margin or high-value goods, or unnecessary on items where the retailer does not need to discount as much. His examples are illustrative and do not establish a universal outcome.
What does the article establish about results?
It provides industry advice and examples, but no measured results showing how much the approach changes sales or margins across retailers.
Source: hardwareretailing.com
