Developing a MAP Pricing Strategy

Playbook for maintaining healthy margins

In this day in age of hyper-competitive online markets, your margins are being eroded by authorized and unauthorized sellers lowering prices in competition for Amazon’s Buy Box and the best price online.

Your margins are your bread and butter and vital to the success of your company and need to be protected. This article is a playbook for preserving your margins and ensuring you can maintain your healthy margins. When developing a MAP pricing strategy, you must ask yourself:

Monitor Your Products Pricing on Major Platforms

With your minimum advertised prices defined, you can now ensure your MAP policy is being honored. Amazon, Walmart, and eBay are the big 3 online retailers, and where the vast majority of your customers are going to do their shopping and price hunting. With all major retailers being a click away, online retailers are under major pressure to have the lowest price and therefore get a major slice of online purchases.

To ensure your MAP policy is being honored, you’ll want to build a database of your product listings on these websites, along with the sellers of your products. With this list in hand, you can then monitor the pricing of your products and track sellers, ensuring that sellers respect your minimum advertised price (MAP) policy.

Some manufacturers maintain a list of authorized sellers, and only these sellers are allowed to resell your products. This allows for more control over your distribution network, ensures that you have the contact information for your sellers, ensures they have and understand your MAP policy, and restricts the resale of your products to additional, unknown 3rd parties.

With the list of products and their sellers in hand, we can now compile a list of sellers who are violating your set minimum advertised price. This involves a periodic spot check using the database of compiled product listings you’ve collected. We can visit URLs of the most important products on the most important sites and ensure that our minimum advertised prices are being honored. This will ensure your margins are not being eroded by sellers competing for the best price.

Confirm Price Adjustments and Repeat

With enforcement sent to sellers, you can continue to spot check and confirm that violations were corrected and sellers are honoring your MAP policy, while also looking for new violations. This begins the cycle of monitoring, enforcing, and confirming. Because sellers will come and go, and the constant pressure to lower prices, this cycle will need to repeat periodically to maintain margins. It’s advisable to monitor the total number of violating sellers and the total number of violating products after each round of monitoring to ensure progress is being made, and your margins are preserved.

This system has been proven to increase overall margins and reduce minimum advertised price violations when followed periodically.