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MAP Pricing vs. MSRP: What's the Difference?

“MAP” and “MSRP” are two of hundreds of acronyms floating around in the world of ecommerce, and they’re two of the easiest to confuse and misunderstand. While MAP and MSRP do play similar roles, they also have key differences that can work in tandem to support and protect your brand on marketplaces. So what are MAP and MSRP and why do they matter? Here’s what you should know:

What is MAP?

MAP (or minimum advertised price) is the minimum amount a manufacturer or wholesaler allows resellers to advertise their products for without consequence from the manufacturer.  MAP policies are only legitimate if:

  1. MAP prices are unilaterally set by the manufacturer, without any discussion or agreement with retailers
  2. The manufactures clearly sets forth what steps the manufacturer can take against MAP policy violators
  3. MAP prices apply equally to all retailers;
  4. MAP prices are enforced equally against all retailers.

By continuing to buy and sell your products, your retailers agree to abide by your MAP policy. When setting a MAP policy strategy, many brands consider the following:

  1. Set a low enough MAP price that it discourages resellers from heavily discounting your products.
  2. Set a MAP price that accurately reflects the brand image and value you want to reflect.

Benefits of MAP

MAP allows you to control your brand identity and promote consumer trust of your product and brand. Here are some of the benefits of having MAP policies:

  • Better brand protection and control
  • Creates a level playing field for retailers
  • Reduces bad customer experiences

How Can Brands Effectively Enforce MAP?

It’s critical MAP policies are structured in such a way that a brand avoids violating antitrust laws. You should work with an experienced lawyer to implement and enforce your MAP policy. One way brands can effectively enforce MAP is by simply monitoring online product prices across digital channels to identify fluctuations in the market and identifying sellers that are violating your policy.  

At Pattern we provide you with the data you need to identify price fluctuations and identify MAP policy violators. Once Pattern’s software helps you find the MAP violators, you and your legal partners can enforce your policy. If you need help to create or enforce a policy, we’ll connect you with the industry’s best partners.

What is MSRP?

MSRP (or manufacturer’s suggested retail price) can help manufacturers standardize pricing across their resale channel and determine what price is fair for their product. The key difference between MSRP and MAP is that MSRP is a suggested price manufacturers set and recommend retailers charge for their goods, without the enforcement mechanisms that MAP policies include.  

MSRP doesn’t necessarily have to be the final price of a product—it’s most often a starting price—but it is often determined by taking into account all of the costs associated with the distribution and manufacturing process for a product and the margin amount resellers need in order to make a profit. MSRP also establishes value. For example, if a brand wants to build a premium brand, the MSRP can reflect the actual or perceived value of their product.

Benefits of MSRP

Setting up an MSRP for your product includes the following benefits:

  • Maintains brand equity
  • Establishes brand and product value
  • Standardizes costs across marketplaces

How Can Brands Effectively Enforce MSRP?

Like MAP pricing, MSRP has to be set up as a one-way recommendation and not an agreement between a manufacturer and a reseller. It’s a recommendation, not a contractual bind. Because MSRP is just a recommendation, brands cannot enforce it.

How Do MAP and MSRP Work Together?

MAP and MSRP have different applications that may prove useful in different scenarios. For example, MAP policies are typically more useful in marketplaces where competition is fierce and price erosion happens easily. Ideally, however, MAP and MSRP are a dynamic duo that work together:

  • Serve the interests of your brand
  • Support your resale channels
  • Protect your resellers

A MAP policy provides a price floor for your product, and when enforced, further standardizes the lower limit of your pricing across your resale channel and gives legitimate resellers a fair environment to compete in. Setting an MSRP establishes value for your product and lets your resellers know you’re serious about controlling channel conflict, maintaining pricing equity, and protecting their margins so they’re more confident setting pricing at the MSRP level. MAP combined with MSRP creates a stronger level of brand protection, giving your brand more sustainable, profitable growth.

Maintain Brand Control With Pattern

MAP policies can be tricky to draft, because there are so many legal lines to tiptoe around and so much nuance that goes into pricing. They can also be tricky to enforce without the right tools. At Pattern, we have the tools and data to enable you to confidently create and implement a pricing policy that will lead to brand control on all marketplaces.  Pattern can help you identify MAP violators, allowing you to regain control of your brand online so that your image and your resellers are protected. Contact us today to learn more.