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 that a manufacturer or wholesaler recommends resellers advertise their products for. MAP pricing policy is essentially a one-way boundary you set to protect your brand, protect the margins of your resellers, and maintain fair competition across all of your distribution channels.
When setting a MAP policy strategy, remember the important things you’ll want your MAP policy to do are:
Protect the interests of your brick-and-mortar resellers, giving them the margins they need to display and carry your product as well as sell it.
Stay small enough that it discourages resellers from heavily discounting your products and keeps competition fair.
Accurately reflects on the brand image and value you want to reflect.
“Advertising” and “recommends” are the key terms here. MAP policies should only recommend the price that is advertised online or in-store for a product, not attempt to fix the actual selling price of the product—that’s illegal—or recommend the actual selling price. That’s MSRP’s job.
Benefits of MAP
MAP not only keeps competition fair, but 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
Provides an accurate performance analysis
How Can Brands Effectively Enforce MAP?
It’s critical that MAP policies are structured in such a way that a brand avoids violating anti-trust laws. One way brands can effectively enforce MAP is by simply monitoring online product prices across digital channels to identify fluctuations in the market.
At Pattern, we help brands not only develop a MAP policy, but also enforce it. Enforcing MAP policies and gaining marketplace control includes finding unauthorized sellers, which Pattern’s data finds. Once Pattern finds the unauthorized sellers, Vorys eControls (Pattern’s legal partner) steps in and handles the takedowns of unauthorized sellers, continuous enforcement of brand management, and reseller policy enforcements.
What is MSRP?
MSRP (or manufacturer’s suggested retail price) is how 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 the actual price manufacturers set and recommend retailers charge for their goods while MAP is the advertised price.
MSRP doesn’t necessarily have to be the final price of a product—it’s most often a starting price—but it is 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 policy and not an agreement between a manufacturer and a reseller to avoid landing a manufacturer on the wrong side of the law. It’s a recommendation, not a contractual bind. As mentioned for MAP policy, Pattern helps brands effectively enforce MSRP with our proprietary data and expertise to protect their brand.
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 if sellers are left unchecked. Ideally, however, MAP and MSRP are a dynamic duo that work together to serve the interests of your brand, support your resale channels, and protect your resellers.
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 is the second half of setting a pricing policy. Setting a MAP price for your product, in addition to an MSRP, further standardizes pricing across your resale channel and gives legitimate resellers a fair environment to compete in while setting boundaries against unauthorized sellers harming your brand.
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, partnered with Vorys, we have the tools and resources to help you maintain brand control on all marketplaces.