Why Do Vendors Use MAP Pricing?
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@360col said in Why Do Vendors Use MAP Pricing?:
That is still price fixing in my book. Suppliers cannot force a retailer to "advertise" a certain price.
In the US they absolutely can. They cannot control the final price, only the one advertised. But advertisement "fixing" is legal in the US. Unethical, probably. Stupid, for sure. But legal, yes.
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@JaredBusch said in Why Do Vendors Use MAP Pricing?:
Second, a manufacturer can absolutely sell their product for any price they want. It is impossible for you to call this price fixing.
They can, but what price they sell it at is not in question. It is controlling the price at which others can resell it at that is price fixing.
I told the vendor in question that prompted this question this... if they felt that their prices were too low that they would not be taken seriously they needed to rause their prices, not do MAP. MAP hurts them by making their products list as too expensive to consider versus their competition, while not providing them with any additional profits. It hurts them in every way.
Why would anyone spend time tracking down a new to market product whose selling point is supposed to be that it is cheap, when their advertised prices are all way higher than their established competition?
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@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@360col said in Why Do Vendors Use MAP Pricing?:
That is still price fixing in my book. Suppliers cannot force a retailer to "advertise" a certain price.
In the US they absolutely can. They cannot control the final price, only the one advertised. But advertisement "fixing" is legal in the US. Unethical, probably. Stupid, for sure. But legal, yes.
And the stores still get around it by advertising things like “includes $50 gift card “ etc.
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@DustinB3403 said in Why Do Vendors Use MAP Pricing?:
@JaredBusch said in Why Do Vendors Use MAP Pricing?:
Second, a manufacturer can absolutely sell their product for any price they want. It is impossible for you to call this price fixing. They may choose a stupid high price that is morally wrong to you or others, but it is 100% their business decision.
So Martin Shkreli shouldn't be in prison for raising the price of Daraprim?
He didn't resell. He raised it directly.
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@Dashrender said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@360col said in Why Do Vendors Use MAP Pricing?:
That is still price fixing in my book. Suppliers cannot force a retailer to "advertise" a certain price.
In the US they absolutely can. They cannot control the final price, only the one advertised. But advertisement "fixing" is legal in the US. Unethical, probably. Stupid, for sure. But legal, yes.
And the stores still get around it by advertising things like “includes $50 gift card “ etc.
LOL, sort of.
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@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
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@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
Like what? Give us examples
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@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
Well, there is that too. In some cases prices are based on discount. There is a MAP or a MSRP but no one ever pays that. Everyone gets from 20-30% discount up to 70-80%. I'd rather get 0% discount and a lower price...
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@Pete-S said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
Well, there is that too. In some cases prices are based on discount. There is a MAP or a MSRP but no one ever pays that. Everyone gets from 20-30% discount up to 70-80%. I'd rather get 0% discount and a lower price...
Huh?
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@Dashrender said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
Well, there is that too. In some cases prices are based on discount. There is a MAP or a MSRP but no one ever pays that. Everyone gets from 20-30% discount up to 70-80%. I'd rather get 0% discount and a lower price...
Huh?
I'm just saying that in some markets prices are way inflated by design. So you can get a feel-good discount but you still end up paying more than if you found another place to buy from with lower prices and no discounts.
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@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
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@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
Agreed
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@Dashrender said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
Sure but MAP is about trying to force the retailers and distributors to not show the real price their selling for. With the sole purpose of trying to artificially keep the price highe
I was told by a vendor that that wasn't the goal, but rather to make their product look more serious as they were being sold so cheaply that people weren't taking them seriously.
Like what? Give us examples
Read the linked article in the OP. it explains it clearly. That is one of the big "reasons" for MAP
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@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
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@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
Sadly because they “think” they are getting a deal. As if some people actually pay the non sale price... which of course some people do, during those short non sale periods.
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@pmoncho said in Why Do Vendors Use MAP Pricing?:
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
that's true... of consumers. So that tells us who these vendors feel that their customers are... the same people who shop at JC Penneys and not IT Pros or real businesses.
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@Dashrender said in Why Do Vendors Use MAP Pricing?:
@pmoncho said in Why Do Vendors Use MAP Pricing?:
@scottalanmiller said in Why Do Vendors Use MAP Pricing?:
@Pete-S said in Why Do Vendors Use MAP Pricing?:
I'd rather get 0% discount and a lower price...
Same. Big discount processes are based on (almost always) massive wastes of time and energy, making backroom deals, and sales people getting access to try to cause more problems. I want an honest advertised price, from an honest vendor, shown publicly for nearly all things, especially commodity items.
I feel the same as you but Ron Johnson (former CEO of JC Penny's) found out the hard way that most people want a higher price with discounts. Don't ask me why but they do.
Sadly because they “think” they are getting a deal. As if some people actually pay the non sale price... which of course some people do, during those short non sale periods.
I can't tell you the last time I paid a non sale price (not including restaurants or while vacationing).
Of course we both know, I just paid the actual price they wanted to sell it for.
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Disclaimer: I own a retail gift shop in a major tourist destination in Florida. Our local economy is 100% tourism based. I’m brick and mortar only. No online sales.
I carry a few lines of brand name apparel that have MAP policies. I also can’t sell these items online via eBay, Amazon, Aliexpress, etc... Essentially no online marketplace is allowed for these brands. I can sell them at my own business website if I choose.
I’m actually ok with their MAP policy. It levels the playing field with other retailers around me that may also carry the same brand. Everyone has to abide by the policy for external advertising. Some retailers who have larger purchasing power than me might get those goods at discounted prices from what I can buy them for (i.e. they are buying 2x or more than what im buying in a given year). It’s nice that they can’t advertise a retail price less than the MAP even since their wholesale costs are lower.
It also prevents “loss leader” sale that is very common with larger box store retailers. I don’t have to worry about a store down the street advertising the same brand for $15 less than wholesale on an item just to get people in the door.
The third reason I like it is the psychological effect of “perceived value”. I’ve done non-scientific tests in my store where I’ll price two very similar items at two very different prices. People seem to be drawn first to the higher priced items most of the time. It’s quite the thing to witness to be honest. Keeping the MAP price higher keeps its perceived value higher.
So anyway that’s my two cents working in retail for 25+ years now. I, as a retailer and business owner, don’t mind MAP at all. Take it with a grain of salt. I understand this all doesn’t translate to IT which is what Scott was referring to in the OP. But I wanted to give a side of MAP that perhaps wasn’t considered.
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@biggen said in Why Do Vendors Use MAP Pricing?:
Disclaimer: I own a retail gift shop in a major tourist destination in Florida. Our local economy is 100% tourism based. I’m brick and mortar only. No online sales.
I carry a few lines of brand name apparel that have MAP policies. I also can’t sell these items online via eBay, Amazon, Aliexpress, etc... Essentially no online marketplace is allowed for these brands. I can sell them at my own business website if I choose.
I’m actually ok with their MAP policy. It levels the playing field with other retailers around me that may also carry the same brand. Everyone has to abide by the policy for external advertising. Some retailers who have larger purchasing power than me might get those goods at discounted prices from what I can buy them for (i.e. they are buying 2x or more than what im buying in a given year). It’s nice that they can’t advertise a retail price less than the MAP even since their wholesale costs are lower.
It also prevents “loss leader” sale that is very common with larger box store retailers. I don’t have to worry about a store down the street advertising the same brand for $15 less than wholesale on an item just to get people in the door.
The third reason I like it is the psychological effect of “perceived value”. I’ve done non-scientific tests in my store where I’ll price two very similar items at two very different prices. People seem to be drawn first to the higher priced items most of the time. It’s quite the thing to witness to be honest. Keeping the MAP price higher keeps its perceived value higher.
So anyway that’s my two cents working in retail for 25+ years now. I, as a retailer and business owner, don’t mind MAP at all. Take it with a grain of salt. I understand this all doesn’t translate to IT which is what Scott was referring to in the OP. But I wanted to give a side of MAP that perhaps wasn’t considered.
So you don’t believe in real capitalistic environment.
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@Dashrender said in Why Do Vendors Use MAP Pricing?:
So you don’t believe in real capitalistic environment.
You are mixing concepts. Like or dislike MAP, the issue here is the reselling, not the selling. The "capitalist" effect is the ability of a different product maker to step into the space. See the stuff that they sell, make something like it for less, make more money.
