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By Ryan Marth, Robins Kaplan L.L.P An old maxim holds that “if you want something done right, do it yourself.”1 Most manufacturers put a great deal of thought into their pricing policies. Many engage in significant efforts to suggest resale prices that give retailers the maximum incentives to promotion their products. The benefits of an established pricing policy—one that does not violate state or federal antitrust laws—are clear. What is less clear, however, is the best way to monitor and enforce the price of your goods down the line.
As a manufacturer, it might seem as if producing your products and profiting appropriately are your major concerns. But in fact, the ecosystem of supporting and promoting your brand is much bigger than that. If both brick and mortar and online retailers sell your product, you can run into problems with pricing in which physical stores must charge more than Internet sellers for the same item to recoup their overhead costs.
You produce a big-ticket item that is different from anything else on the market, and consumers can’t seem to get enough. Your product offers an intrinsic value that people understand, appreciate, and are willing to pay for, right? Actually it’s not exactly that simple. Your product’s value is determined at least in part by its price. Consumers are willing to pay more for an item when they can see the difference, but what happens when they can’t? If you don’t have a minimum advertised price policy in place, your brand could become a commodity faster than you might think.
Retailers are constantly watching for each other to drop prices. If you're only keeping tabs on the larger sites like Amazon, you're likely to miss those who actually start the price games. By the time sites like Amazon do drop prices, a domino effect often quickly follows. Don't let this happen to you - make sure you're monitoring and enforcing your MAP policy effectively.