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Mike Aylen, an industry expert and NHPA strategic consultant, recommends that hardware retailers use customer groups and department-specific pricing plans for contractor and other professional buyers. His guidance is an industry viewpoint, not a report of measured results; he says retailers should review customer activity at least twice a year and avoid broad discounts that can erode margins on particular products.
Hardware Retailing has published the fourth installment of its “Inside the Margin” series, in which industry expert and NHPA strategic consultant Mike Aylen advises hardware retailers to use customer groups and category-specific price plans to pursue contractor sales without applying discounts indiscriminately. The piece sets out a pricing approach, but does not report measured results from a named retailer or establish that the method produces a particular increase in sales or profit.
Aylen recommends starting with customer groups based on the work customers do, such as plumbers and painters, and using a retailer’s existing customer base to decide which groups fit its market. For a plan built from scratch, he suggests keeping the number of groups to 10 or fewer, with exceptions for individual high-volume customers. He says a limited number of groups can make sales reviews and adjustments more manageable.
Retailers should set clear allocation criteria for each group, Aylen writes. Those criteria could reflect a customer’s day-to-day business, sales volume, or both. He describes working with a large retailer that divided plumbers into large, medium and small groups, with discount rates tied to monthly sales. He also says loyalty may justify a stronger offer than sales volume alone would indicate, such as when a customer gives the retailer all of its business.
Once groups are in place, the article recommends setting discounts by department, with further adjustments at the class, fineline or individual SKU level where needed. Aylen warns against a single discount across all departments, arguing that a uniform rate may cut prices too far on some goods while offering unnecessary discounts on others. He says retailers can use pricing software such as Margin Master or Epicor Pricing Planner, or build and check plans manually in Excel.
Discounts Can Vary by Department
The advice focuses on a tension facing retailers selling to professional customers: attractive prices may help win or retain business, but discounts applied without regard to product economics can reduce margin. A contractor’s basket may include both low-margin, high-value goods and products with more room for discounting. A rate that works for one category may not work for another.
Aylen illustrates the risk with examples from his experience. He says a 15% global discount could leave little profit on hot water units, while the same discount on ladders could mean selling them at a loss. He also recounts a retailer’s plumbing plan set at cost plus 28%: a clamp was priced at 94 cents, compared with $1.64 at what Aylen calls the retailer’s main corporate competitor. These are examples cited by the author, not independently verified market comparisons or proof of the results of a revised plan.
For retailers, the practical implication is that customer pricing needs to be tested against the items people actually buy. The proposal also treats pricing as an ongoing sales tool: purchase patterns can help identify categories a customer may be buying elsewhere, creating a reason for a sales conversation. The article does not quantify potential gains, so any effect on sales or margins will depend on a retailer’s costs, prices, customer behavior and execution.
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A Customer-Based Pricing Framework
The article is the fourth piece in Hardware Retailing’s “Inside the Margin” series. Aylen frames the subject around growing sales and protecting margins among contractor and other professional customers through category price plans. He suggests retailers use sales-by-customer reports to assign accounts and review activity, rather than relying on a single permanent classification.
Aylen recommends checking group assignments at least twice a year. If a customer’s sales are falling, he says, the retailer can arrange a meeting to understand why. He also advises estimating a customer’s potential monthly spend by looking at what the customer buys, in what quantities, and which routine needs are not being purchased from the store. This is the author’s recommended process; the source does not provide a formal study comparing it with other pricing methods.
For new customers, Aylen proposes a 60- or 90-day trial group rather than immediately granting the best permanent discount. He says retailers should explain the criteria for moving into a standing group and let customers demonstrate that they meet them. At the product level, he cautions against fixing an SKU exception at a set price indefinitely; he recommends using an expiration date so the exception can be revisited.
““The main advantage is that you can use it to grow sales.””
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Retailer Data
The article offers practitioner guidance and examples, not a controlled assessment of the method. It does not identify the retailers in its examples or provide their full cost data, sales histories, discount schedules or outcomes after pricing changes. The cited clamp comparison is Aylen’s account; the source does not independently verify the competitor’s price or specify when the comparison was made.
It is also unclear how much any retailer should discount a given category. The article gives no standard rates, benchmarks or evidence that a particular grouping system will lift sales or preserve margin across different markets. Retailers would need to assess their own costs, local competition, customer purchasing patterns and pricing rules before adopting a plan.
Review Plans Against Sales
Aylen’s proposed next steps are operational: define customer-group criteria, examine prices by department and, where necessary, by smaller product categories, then enter the plans into a pricing system or a spreadsheet. Retailers would then allocate accounts and review customer sales information at least twice yearly, adjusting group placement or discounts as the evidence warrants.
The article does not announce a retailer rollout, a new product or a scheduled follow-up date. Aylen says he plans to address another topic in a subsequent installment of “Inside the Margin,” but the source does not specify what that topic will be or when it will appear.
Key Questions
What did Mike Aylen recommend?
He recommends grouping professional customers using clear criteria, then setting category-specific discounts rather than applying one rate across every department.
How many customer groups does the article suggest?
For a plan starting from scratch, Aylen suggests no more than 10 groups, with individual plans added where a customer’s volume warrants one.
How often should retailers review customer groups?
Aylen recommends reviewing allocations and customer sales information at least twice a year, with adjustments when the data or customer activity calls for them.
Does the article show that category price plans increase profit?
No. It provides advice and examples from Aylen’s work, but reports no measured results establishing a sales or profit increase.
How should retailers handle a new professional customer?
Aylen suggests a 60- or 90-day trial group and clear criteria for earning a permanent plan, rather than granting the highest discount immediately.
Source: hardwareretailing.com
