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REAL ISSUES REAL ANSWERS: Pro Discounts and Margin Pressures

“The key is this: What do you consider to be an ‘acceptable margin?’ If the answer is whatever the market will bear, then you’ve missed the whole point of doing honorable, profitable business as opposed to taking advantage of your relationship with the contractor. American business acumen has recently taken this tact. I think we should revert back to a more honorable way of doing business that relies on a moderate profit margin and a long-term, relationship-building model.”

“Our strategy, instead, is to provide the best pricing we can offer to all of our customers. We had a discount for contractors in the past, but it often led to confusion and frustration.”

“I read some great advice about sales that I think also fits retail sales as well: Always offer the best price you can up front. This lets people realize that every time you give them a price, it’s the best you can do. It lets them be at ease, instead of worrying about whether they should have haggled you harder and gotten a better price. I believe people come back because they know we’re doing the best we can for them, upfront, no matter who they are.”

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“Our company’s corporate office understands that every market is different and will set regional retail pricing, but also leaves freedom to the individual stores to use what makes sense in their market. I take the top price-sensitive items and check what competitors are selling at, then send what retail pricing I want to use in to our corporate office. This is done monthly to stay in line with the market; sometimes you have to ignore your cost and be where the market is at, good or bad.”

“We have contractor pricing (three tiers) that is used as a discount from retail pricing, which I also go through monthly after setting the retail pricing to determine the percentage of discount off of retail. It is a lot of extra work to do this, but it gives my inside and outside sales staff a consistent price strategy to work with and takes some of the margin guesswork and product category margin ruts out of the equation.”

“Our revenue is 90% pro-contractor. We get very little walk-in traffic. We are never the lowest price option for our customers. We overcome this by offering advertising to our loyal customers instead of advertising our own business. We help them manage their projects, and our best customers view us as partners in their success. In fact, we often have to offer lower prices to new customers and maintain healthier margins with our loyal, repeat customers.”

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