What Is MAP Pricing? A Brand’s Guide to Minimum Advertised Price
What Is MAP Pricing?
MAP pricing is the lowest price retailers may advertise a product for when a manufacturer has implemented a minimum advertised price policy.
MAP Pricing Definition
While there is a lot of misunderstanding around MAP pricing, what it actually means is that when manufacturers create authorized dealer agreements with select retailers, they may also include a minimum advertised price policy.
Those retailers then agree that in order to be preferred dealers of the manufacturer’s merchandise, they will abide by the brand’s MAP, never advertising products below the specified price.
Wait – Can a Manufacturer Set Retail Prices?
No, MAP pricing does not mean manufacturers get to control actual retail prices. Retailers are able to sell products at any price they see fit – they simply can’t advertise below MAP.
The definition of “advertise” is fluid in the age of ecommerce, though. For example, some MAP policies may prohibit add-to-cart pricing even though an advertised price in such a case isn’t in view until a consumer adds the product to their shopping cart.
What MAP Pricing Is Not
In the online literature surrounding MAP, you might see it referred to as a MAP agreement. This is an understandable mistake, but still a mistake. A MAP policy itself is not an agreement between manufacturers and retailers.
It may be included in an authorized dealer agreement, in which retailers accept it as a condition of being a retail partner, but the MAP pricing policy should always be communicated directly from the manufacturer with no room for negotiation or discussion, as this could be considered price fixing.
Why Brands Need a Unilateral Pricing Policy
If you’re not sure if you need a MAP policy, consider the number of retailers selling your products and the prices at which they’re being advertised. Ask yourself:
- Are there third-party marketplace sellers listing your products at much lower prices than your brick and mortar retailers?
- Are you finding that traditional retailers are complaining or concerned about ecommerce sellers?
- Are you getting a lot of inconvenient drop ship orders?
- Can you accurately forecast your revenue, or are there unpredictable spikes that leave you scrambling to guess their origin and wondering if they’ll happen again?
If you’re facing any of these issues, it’s a sign that a MAP policy could help protect your brand’s value by leveling the playing field for all retailers and stabilizing advertised prices across channels.
Creating a MAP Policy for Your Brand
Getting started with MAP is not difficult. Consult an antitrust attorney to help you draft your policy and communicate with dealers. Use these samples and templates as a jumping off point. If you don’t already have an authorized dealer agreement, create both documents at the same time.
Then be ready to enforce your policy by partnering with a SaaS that will monitor for violations and serve as a platform for sending and tracking violator communications. ORIS Intelligence can help you as you begin to draft your MAP policy through the enforcement stage.
Contact us for a free consultation today.