When it comes to actually selling your product, determining the price is a bit complicated. You are presumably not the only one selling your product – you want it to be in stores at Walmart and Advance Auto Parts and online at Amazon. Even if you are only selling parts directly to repair shops, those parts are being sold to the consumers by the shops and not by you. That means that you do not have complete control over what every sale of your product is priced at.
You can control two things, however.
First, you can set your product’s Manufacturer’s Suggested Retail Price, more commonly abbreviated as MSRP. The MSRP is the price you believe your product should be sold at. If you think your product should cost $60 to buy, then you can set that as your MSRP. Retailers have no legal obligation to sell the product at your MSRP, but it gives you a say in the selling process.
Where you set your MSRP determines how people will look at your product. If you set a higher price, people will perceive it as higher-quality, but might balk at a price that is too high. If you set it low, you may get more customers, but they will perceive your product as cheap and potentially flawed.
Secondly, you can set your product’s Minimum Advertised Price, abbreviated as MAP. This is the lowest price that your product can be advertised as being sold at. Unlike MSRP, this is an actual agreement which you enter into with retailers selling your product. It does not regulate how much they can actually sell your product for, but how much they can advertise in writing that it is being sold for.
For instance, if your product’s MSRP is $60, you may set it’s MAP at $40. This means that a retailer can only advertise the price of your product as being $40 or above. They are able to sell it in their store for $5 if they so desire, but they cannot advertise that price. If you are trying to cultivate an image of a luxury product, you may also want to set your MAP high to try to avoid advertising any deep sales.
MAPs are common practice and completely legal since they do not regulate the retailer’s actual selling price. The practice becomes somewhat complicated with online retailers. They are technically not allowed to break MAP on a product listing, but they can when the product has been added to your cart. This is what it means when you see a listing that says “Product price will be revealed in cart.” Online retailers are arguing that their cart is the virtual equivalent of entering a store and seeing what the price is inside.
If a retailer breaks your MAP, you have the right to remove your product from their store and stop selling with them. This is complicated with Amazon, who primarily use third-party sellers instead of their own stock. If you have any questions about MSRP or MAP for your automobile aftermarket product, contact Aftermarket Law today. If you made it, we protect it!
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