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Hardware Retailing published the fourth installment of its “Inside the Margin” series, in which industry adviser Mike Aylen outlines a category-based pricing approach for contractor and other professional customers. He recommends defining customer groups, reviewing them regularly and setting discounts by department or product level rather than applying one broad discount across a store.
Hardware Retailing has published the fourth article in its “Inside the Margin” series, with industry expert and NHPA strategic consultant Mike Aylen recommending category-based price plans for contractor and professional customers. His guidance focuses on grouping customers by their business and sales activity, then setting discounts by product category to pursue sales while limiting avoidable margin loss.
Aylen advises retailers starting from scratch to keep standard customer groups to no more than 10, with individual plans added where a customer’s volume warrants one. Groups might include plumbers, painters, builders, concrete workers, property maintenance businesses and local councils. Retailers should use their own customer base and market to choose relevant categories, he writes.
Before assigning a customer, retailers should decide what qualifies someone for a group: their day-to-day work, sales volume or other criteria. Aylen describes a large retailer that split plumbers into large, medium and small groups and tied discount rates to monthly sales. He recommends reviewing customer activity at least twice a year, using sales-by-customer reports to consider changes in allocation and identify customers whose purchases have fallen.
For discount-setting, Aylen cautions against a single discount across all departments. Instead, he recommends checking the effect in each department and, where necessary, adjusting rates at the class, fineline or individual stock-keeping-unit level. Retailers can use Margin Master or Epicor Pricing Planner for this analysis, according to the article, or calculate rates in Excel. He also advises dating SKU-level exceptions so they expire rather than fixing them indefinitely at a set price.
How Category Discounts Affect Margins
The article addresses a practical tension for hardware retailers: customer discounts can support loyalty and sales, but a broad percentage reduction may cut too deeply into products that already carry limited margin. Aylen’s examples show why the same rate can have different effects across categories. He warns that a 15% storewide discount could leave little room on hot water units and could result in ladders being sold at a loss.
His approach also connects pricing to customer retention and sales development. Regularly checking purchase patterns may help a retailer spot reduced business and ask the customer why, while estimates of a customer’s potential monthly spend can point to products the customer currently buys elsewhere. Those are recommended practices, not demonstrated results: the source does not report measured margin gains or sales increases from the approach.
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A Fourth Installment on Retail Pricing
The piece is an industry viewpoint by Mike Aylen, not a research study or announcement of a new pricing product. It appears as the fourth article in Hardware Retailing’s “Inside the Margin” series and concentrates on price plans for contractor and professional customers.
Aylen’s examples illustrate the risks he wants retailers to examine before setting rates. In one case, he says a retailer’s plumbing plan priced items at cost plus 28%; a clamp was then selling for 94 cents while a major competitor charged $1.64. In another, he warns that a uniform 15% discount can be unsuitable for particular products. The examples are Aylen’s reported observations; the article does not identify the businesses or provide supporting transaction data.
““The main advantage is that you can use it to grow sales.””
— Mike Aylen, industry expert and NHPA strategic consultant
Evidence Behind the Pricing Examples
The article does not state when it was published, provide a retailer’s name for its examples or include underlying sales, cost or margin records. It also does not quantify how much sales or profitability changed after the described plans were adjusted. The advice is presented as Aylen’s professional guidance, so readers cannot assess from the article alone how broadly the examples apply across retailers or markets.
Other details are left to individual retailers: the source does not prescribe discount percentages, define a universal customer-group threshold or specify how to estimate a customer’s potential monthly spend. Those choices depend on the retailer’s customers, product mix and pricing data, according to the approach described.
Review Plans Against Customer Data
Aylen’s recommended next step is for retailers to develop customer-group criteria, examine selling prices by department and calculate discounts before assigning plans in their pricing system. After launch, they should use sales-by-customer reports to review allocations at least twice a year, look into declining purchases and adjust rates or categories where needed.
For new customers, he suggests starting with a 60- or 90-day trial group rather than immediately granting the best permanent terms. The customer can demonstrate whether they meet the retailer’s criteria before moving into a regular group. The source does not announce a date for the next “Inside the Margin” article or identify a specific follow-up development.
Key Questions
What does Aylen mean by a category price plan?
It is a pricing arrangement that assigns customers to groups and sets discounts by product department, with finer adjustments by class, fineline or individual SKU where needed.
How many customer groups does the article recommend?
For retailers building a plan from scratch, Aylen recommends no more than 10 standard groups. He says certain high-volume customers may need individual plans in addition to those groups.
How often should retailers review customer groups?
Aylen recommends reviewing them at least twice a year, using sales-by-customer information to identify changes in activity and consider whether allocations should be adjusted.
Why does the article caution against one discount for every department?
Products have different selling prices and margins, so a uniform discount can be unnecessarily costly on some items. Aylen gives hot water units and ladders as examples of products that may not support a broad 15% discount.
Does the article show that category pricing increases profits?
No measured profit or sales results are provided. Aylen presents the method as advice for growing sales and protecting margins, but the article does not quantify outcomes.
Source: hardwareretailing.com
