money for map pricing

Price influences the decision-making of consumers when it comes to purchasing. Competitive and dynamic pricing gives an edge to a business. But what is fair pricing? What is MAP pricing? MAP pricing policy was born to keep a check on excessive price variations. This was also meant to protect brands from corrosive prices. The goal was to level the playing field and ensure equal opportunities for all players in the retail marketplace.

Sadly, some retailers do not play the game fairly and breach the MAP set by brands in order to win consumers by offering the lowest prices. But this kind of marketing tactic does no good to the brand’s reputation when retailers advertise products at lower prices than the MAP. On top of it, it can ruin the brand business.

Define MAP Pricing

In simple words, MAP is a minimum price set by brands below which resellers agree not to advertise or sell products. It is binding on resellers or retailers in the form of legal or non-written agreements. The objective is to maintain brand positioning, reputation and sustain their business.

With the evolution of the e-commerce market, there has been a resurgence of third-party marketplaces online. As a result, the market is flooded with retailers and resellers who might be interested to sell their products across the globe.

That means brands cannot ignore the need to keep a check on the prices offered by resellers and ensure that their prices are in line with the MAP pricing.

What is MAP Pricing Objective?

MAP pricing agreements are designed to:

  • Protect seller margins
  • Promote fair competition
  • Prevent under-pricing of products
  • Protect price violation
  • Maintain brand identity, reputation, and value
  • Ensure fair play in the business world

To address MAP violations, a manufacture should:

  • Identify resellers violating MAP policy
  • Inform all resellers on the stringent MAP enforcement
  • Send constant reminders to resellers to respect MAP pricing policy to avoid a ban
  • Give one chance to the violator before imposing a ban

MAP agreement requires resellers to abide by MAP regulations with a mission to build fair competition on different ecommerce channels, maintain stable margins, build brand identity, help online stores better compete with the big fish, have a consistent relationship with resellers and retailers.

However, manufacturers cannot do anything if they did not enforce minimum pricing.

What Is MAP Pricing Exemption?

Exemptions are applicable in some cases. Some brands may allow retailers to advertise a lower policy to special groups. This includes veterans, military service members, etc. In that case, a retailer must prove that only these exempt groups would benefit from MAP reduction. MAP pricing exemption may be applicable at certain times of the year. For example, the holiday season or Black Friday. But brands have the last call and will make the decision on allowing exemption or not.

Is MAP Pricing policy legal?

It is legal under U.S. antitrust statutes and serves to protect the interests of manufacturers and prevent brand erosion.

According to the FTC, the price displayed in an encrypted shopping cart may not be subject to MAP. The simple reason is that encrypted message cannot be considered advertising. While the shopping cart of an online store may be similar to what it is in a brick and mortar shop, the price paid by a customer in the online world might be lower than MAP.

Brick-and-mortar retailers contend that they have limitations over advertising with a disclaimer in a newspaper that says the “actual price paid in the store is less.”

In fair trade, retailers and resellers must honor and follow MAP policies and enjoy a good relationship with brands or manufacturers.