explain MSRP

[dr g]

OP may be confusing MSRP for MAP, MSRP is the suggested price point of the product from the manufacturer, which informs the retailer of the general market intention of the product. MAP on the other hand is more about competition: How Minimum Advertised Pricing Impacts Your Retail or Online Store

Note that these are both company policies, not laws, you can sell anything for any price you want*. But if you violate MAP, you are not likely to be able to distribute products (via legitimate channels) from a manufacturer if they catch wind.

* There are some nuances to this but in this industry this is generally true.

 

[BostonJim]

I stopped reading after a while so I'm not sure where this thread went, but...

Nintendo, Sony, XBox, and game cube all had a set minimum price. There was a slight difference between different stores, but never more than a few dollars. How does these companies and vape manufactures get away with this? Along with hundreds of other products? Haven't a clue. But it must be legal, otherwise the government would end such practices, right? Right?

 

[Ref Minor]

Ok then , how are the UK or the USA government going to take a Chinese company to task ?
Yes , another flippant rhetorical question, as the answer is they cannot and they will not .
Otherwise they would be stamping their boots all over the orient over copyright ... helloooo ChIPad etc.

Now I do wonder about your company story there , something seems amiss .
As the devil is in the detail and such would be far too an invasive line of questioning we'll leave that one there .
Just to note , I am not calling into question your honesty . I can imagine that it would happen , but you'd have to be in the wrong place at the wrong to time, to use a vernacular .

The company story is true, the fine was reported on by the media too, I won't go into detail as I don't want it to be identified.

How the GVT would take a company to task is simple, they would start a case of price fixing, if the Chinese company did not stop and did not pay the massive vs turnover fine, they would be banned from doing business in the country, any wholesaler or retailer would find their import paperwork refused. Obviously some small shipments would get through but any decent sized retailer or wholesaler would just switch their purchases to a competitor to avoid tangling with the Customs dept.

 

[peterforpats]

Hehe , your aloof, patronising, sophistry isn't an effective camouflage for a lack of principles .

wow.amazing how much you know me by just reading a few posts on a forum. wish I was blessed with your insight. you know nothing about my principles. but at least I know how to spell.

 

[peterforpats]

OP may be confusing MSRP for MAP, MSRP is the suggested price point of the product from the manufacturer, which informs the retailer of the general market intention of the product. MAP on the other hand is more about competition: How Minimum Advertised Pricing Impacts Your Retail or Online Store

Note that these are both company policies, not laws, you can sell anything for any price you want*. But if you violate MAP, you are not likely to be able to distribute products from a manufacturer if they catch wind.

* There are some nuances to this but in this industry this is generally true.

again, why does MAP matter to a manufacturer? as a vendor you paid whatever was required to purchase the units. how does it sully , degrade , or harm the manufacturer if you sell that product for any price? so they stop selling to you- now there is one less outlet for their product and all the rest are higher in price. pretty soon the public will move on from some artificially high price to something else- all for a price that doesn't effect the manufacturers bottom line- until they sell less of the item because you've found the same or similar product you can sell your customers for less. they end up with one or two dealers selling at a high price , while everyone on the forums and elsewhere tell everybody about that new product that is MUCH cheaper. manufacturers are a short sighted bunch.........If they let pricing alone more vendors with competition would sell more of their product not less.

 

[SmellYaLaterCigs]

again, why does MAP matter to a manufacturer? as a vendor you paid whatever was required to purchase the units. how does it sully , degrade , or harm the manufacturer if you sell that product for any price? so they stop selling to you- now there is one less outlet for their product and all the rest are higher in price. pretty soon the public will move on from some artificially high price to something else- all for a price that doesn't effect the manufacturers bottom line- until they sell less of the item because you've found the same or similar product you can sell your customers for less. they end up with one or two dealers selling at a high price , while everyone on the forums and elsewhere tell everybody about that new product that is MUCH cheaper. manufacturers are a short sighted bunch.........If they let pricing alone more vendors with competition would sell more of their product not less.

You seem to forget that vendors are free to NOT purchase a product if they don't agree with the price the manufacturer forces them to advertise.

If they are concerned about the scenario you spelled out then they are making a mistake by carrying that product.

 

[Coastal Cowboy]

Once again for those who are slow on the uptake, if a willing buyer and willing seller agree to terms of sale, AND it's a voluntary transaction, then the market did its job.

Don't like it? This is a republic. Shop or move elsewhere. Free enterprise and free choice built the best economic system in world history.

Only nanny state fans think otherwise. Oh and... that nanny state wants to take away your right to vape. Again, congrats progressives. This IS what you wanted, right?

If not, time to change your concept.

 

[cmdebrecht]

(I am in the yarn business)

YARN? Where? :sly:

Sent from my SM-T310 using Tapatalk 4

 

[disco180]

It has always been my understanding...(What little that I have) is that if the company supplies me with the product for free to work off of what would be consignment then I have to sell it at the MAP. If I buy the products out right up front I can do what I want with the price. If a company does supply me and stock my shelves with products, part of that agreement is that I sell at their price point and pay the company back.

 

[Penn]

Once again for those who are slow on the uptake, if a willing buyer and willing seller agree to terms of sale, AND it's a voluntary transaction, then the market did its job.

Don't like it? This is a republic. Shop or move elsewhere. Free enterprise and free choice built the best economic system in world history.

Only nanny state fans think otherwise. Oh and... that nanny state wants to take away your right to vape. Again, congrats progressives. This IS what you wanted, right?

If not, time to change your concept.

What, in particular, some aren't getting is "why?". I mentioned protecting the market before. It is something that I understand enough to get how it works but not enough to put it in one post on a message board. Maybe someone can explain how one or a few retailers dropping a products price too much can destroy the market for a product or service in a nice succinct way.

 

[coho72]

"Manufacturers want to protect their patents and trademarks by ensuring that pricing is relatively uniform across all markets." this makes no sense - how is a patent protected or a trademark infringed by a vendor selling a product for less than the manufacturer wants? the vendor is paying the agreed upon price anything after that is flat out price fixing. if I could buy a brand new lexus for $25k how does Toyota get harmed? either it is a wanted product or not. once I buy anything if I want to sell it for any price to anybody why can't the manufacturer demand I get a certain price- they can't nor should they be able to. once the sale is complete the goods belong to whomever paid for them. the product I was looking for was a Russian 91%- all the vendors are now engaged in price fixing because the manufacturer demands it. it should be illegal....

Are you irritated with the msrp of the Russian or irritated at the fact they sold about 80 of them for way cheaper until Kebo found out and those that got in early on the cheap price is being honored by the vendor? Cuz that's what it sounds like from the start here. This way of business has been done forever it protects products , vendors , markets and whole economies . Next time don't drop the ball when you see a great deal and you will save yourself the headache of asking what MSRP is and then arguing with the people that try to explain it to you.

 

[Kelevra]

MSRP's function to help both a vendor and manufacturer. Without getting into supply chains with varios SRP's and such, the MSRP allows multiple businesses to carry a product at around the same price. If widget A cost $1 to manufacture, is sold at $1.50 per unit ($.50 profit for manufacturer), and carries a MSRP of $3 (gross profit of $1.50, keep in mind a retailer has rent, employees, various bills, and the product may sit on the shelf for some time possibly never being sold), this allows mom and pop shops to compete with a place like walmart. Huge conglomerates can and do use their buying power (they purchase and sell millions of widget A) to force the manufacturer to sell to them at $1.25 per unit. If they then turn around and sell at $1.50 retail this undercuts every other participant vendor (mom and pop arr buying at $1.50 they can't sell at $1.50 too) and can potentially put them out of business. After they have decimated the competition and are the only purchaser they can then extort the manufacturer to lower the price even more say $1.05 and then raise the retail price to $5.00 because they have no competition. MSRP's in an IDEAL situation can and do help competition, unfortunately we live in an imperfect world and this does not always happen ideally.

 

[Penn]

MSRP's function to help both a vendor and manufacturer. Without getting into supply chains with varios SRP's and such, the MSRP allows multiple businesses to carry a product at around the same price. If widget A cost $1 to manufacture, is sold at $1.50 per unit ($.50 profit for manufacturer), and carries a MSRP of $3 (gross profit of $1.50, keep in mind a retailer has rent, employees, various bills, and the product may sit on the shelf for some time possibly never being sold), this allows mom and pop shops to compete with a place like walmart. Huge conglomerates can and do use their buying power (they purchase and sell millions of widget A) to force the manufacturer to sell to them at $1.25 per unit. If they then turn around and sell at $1.50 retail this undercuts every other participant vendor (mom and pop arr buying at $1.50 they can't sell at $1.50 too) and can potentially put them out of business. After they have decimated the competition and are the only purchaser they can then extort the manufacturer to lower the price even more say $1.05 and then raise the retail price to $5.00 because they have no competition. MSRP's in an IDEAL situation can and do help competition, unfortunately we live in an imperfect world and this does not always happen ideally.

I read that and was thinking but you left out this, this and that. Then it dawned on me, keeping is simple and presenting the most obvious aspect of protecting the market should be enough for a reasonable person, lol.

 

[Kelevra]

I read that and was thinking but you left out this, this and that. Then it dawned on me, keeping is simple and presenting the most obvious aspect of protecting the market should be enough for a reasonable person, lol.

Yeah we could talk for hours about various market forces, and still only skim the surface. Then someone would point out something like commodities. Those have entirely different market forces with different regulations. We could look at keynsian economics vs reagonomics vs libertarian ideals, and macro vs micro. Its a slippery slope down a very deep well when trying to discuss economics. Best to keep it simple imo

 

[Coastal Cowboy]

MSRP's function to help both a vendor and manufacturer. Without getting into supply chains with varios SRP's and such, the MSRP allows multiple businesses to carry a product at around the same price. If widget A cost $1 to manufacture, is sold at $1.50 per unit ($.50 profit for manufacturer), and carries a MSRP of $3 (gross profit of $1.50, keep in mind a retailer has rent, employees, various bills, and the product may sit on the shelf for some time possibly never being sold), this allows mom and pop shops to compete with a place like walmart. Huge conglomerates can and do use their buying power (they purchase and sell millions of widget A) to force the manufacturer to sell to them at $1.25 per unit. If they then turn around and sell at $1.50 retail this undercuts every other participant vendor (mom and pop arr buying at $1.50 they can't sell at $1.50 too) and can potentially put them out of business. After they have decimated the competition and are the only purchaser they can then extort the manufacturer to lower the price even more say $1.05 and then raise the retail price to $5.00 because they have no competition. MSRP's in an IDEAL situation can and do help competition, unfortunately we live in an imperfect world and this does not always happen ideally.

Somebody gets it.

The last thing in the world we need are monopsonies dealing with monopolies. Purely competitive markets are a theoretical impossibility, on both the supplier and the buyer side. We are in a monopolitistic competitive market, and have been since the Industrial Revolution. It is what it is, and we simply have to deal with the loss of consumer surplus we'd have in more competitive markets. But in exchange, we've had remarkable advances in technology, and even more remarkable reductions in the cost we pay for goods and services.

If you were in my Economics 204 class, you would get an "A" for this post.

 

[dr g]

It has always been my understanding...(What little that I have) is that if the company supplies me with the product for free to work off of what would be consignment then I have to sell it at the MAP. If I buy the products out right up front I can do what I want with the price. If a company does supply me and stock my shelves with products, part of that agreement is that I sell at their price point and pay the company back.

Certainly if the company is granting you credit you would do well by abide by their policies. You aren't required by law to, but if you want to continue to work with that company in that way you will abide.

again, why does MAP matter to a manufacturer? as a vendor you paid whatever was required to purchase the units. how does it sully , degrade , or harm the manufacturer if you sell that product for any price? so they stop selling to you- now there is one less outlet for their product and all the rest are higher in price. pretty soon the public will move on from some artificially high price to something else- all for a price that doesn't effect the manufacturers bottom line- until they sell less of the item because you've found the same or similar product you can sell your customers for less. they end up with one or two dealers selling at a high price , while everyone on the forums and elsewhere tell everybody about that new product that is MUCH cheaper. manufacturers are a short sighted bunch.........If they let pricing alone more vendors with competition would sell more of their product not less.

As another user mentioned it allows many types of businesses to compete and prevents market distortions by big buyers. The rest of what you said is irrelevant to anything, MAP policies can be and are evaluated by supply/demand effects.

 

[peterforpats]

Once again for those who are slow on the uptake, if a willing buyer and willing seller agree to terms of sale, AND it's a voluntary transaction, then the market did its job.

Don't like it? This is a republic. Shop or move elsewhere. Free enterprise and free choice built the best economic system in world history.

Only nanny state fans think otherwise. Oh and... that nanny state wants to take away your right to vape. Again, congrats progressives. This IS what you wanted, right?

If not, time to change your concept.

you have a very short sighted view of history- watch in a few years when the Chinese and Indians bury us economically in the coming years-by the middle of this century your kids and grandkids will be speaking Chinese or be left out. I wish it weren't true but we will end up just a middle of the pack country that happens to have nuclear weapons. heck, we're almost there now. but you just keep on blaming "progressives" if it helps you sleep at night, but the top 1% sold us out a long time ago. all I asked was why a business can't sell a product for what it wants to and I get told how it is good for business. so how come fasttech is probably the largest vaping business? is it because they follow the your "business model" or because they don't? and watch them get bigger.......

 

[dr g]

all I asked was why a business can't sell a product for what it wants to and I get told how it is good for business.

Actually what you did was refuse to acknowledge what actually was told to you, which is that a business can very well sell a product for what it wants, at the risk of damaging its relationship with the manufacturer. It can accept that risk if it wants, and reap the rewards of sales.

What is good for business in a free trade construct is self-determining, but you should note well China often does not engage in free trade.

 

[vicflo]

Ok then. You can tell who is in the industry and who isnt. Back to my example.

Retailers are just middlemen, meaning we are buyers just like the consumer except we deal with the cutthroat pleasure of wholesale buying (tax id, expected sales volume, recurring inv etc.) and having to please customers at the same time. Im assuming you think all buyers get the same or similar wholesale prices.

Big Mart = buys 1 millon units of ego batteries for $.50 and sells under MSRP for $10.00
Profit = $9.5 million

John Doe's Vapes = buys 10 units of ego batteries for $7.50 each and must compete with Big Mart @ $9.50
Profit = $20 = ramen noodles for dinner
This is disregarding the general rule of at least 50% +percentage for s/h, operating cost...etc

yes those numbers are very realistic. Some markup on items in big name stores are upwards of 5000+% of what they buy them for.

Take that knowledge and drive around and look at all the closed down mom and pop shops within the vicinity of a big name chain. All you will see is specialty shops and food shops. Products that big buyers cant or dont care to carry.

"all I asked was why a business can't sell a product for what it wants to and I get told how it is good for business." ^ thats why... the bigger buyer always wins.

 

[OlDogNewTricks]

It is just a suggested price. I can suggest that a Big Mac sell for $15.00 all day long. It simply opens the door for high volume retailers to offer the product at a lower price if they can lower their cost for doing business. If I see a MSRP on a product, the ears go up and I begin to look harder for deals. Profit is profit, higher starting price, few sales, lower starting price, higher volume. JMHO.