What you’ll learn
MAP is the acronym for “Minimum Advertised Price” for physical goods.
It’s a pricing template established by brands for their products. Technically, MAP is not the lowest price retailers can sell an inventory – it’s the lowest price they can display publicly for shoppers to see.
A MAP policy is a document that protects sellers, brands, and even consumers from the problem of price erosion. Price erosion makes it extremely difficult to spot copycat products and fraudulent sellers, and it also reduces sellers’ margins and the perceived value of an inventory. Having a MAP policy in place helps define the consequences for violating an inventory pricing template and outlines the processes brands can follow to enforce the penalties.
Since there are so many pricing policies in e-commerce business, it can be difficult to pinpoint the right policy for your business and why a particular policy is valuable. And that’s why I have created this post to explain everything you need to know about MAP pricing.
Ahead, you will learn why MAP pricing is different from other policies, when you need a MAP policy, and how to develop a MAP. You will also learn how to enforce and maintain your MAP policy.
How is MAP different from other pricing policies?
I mentioned earlier that MAP is not the minimum price a seller can sell an inventory. Rather, it is the manufacturer’s suggested retail price you can display for shoppers to see. As a brand owner, MAP pricing will help protect your brand and pricing that will race to the bottom (ordinarily, customers shouldn’t see your inventory price below this point). MAP pricing also gives sellers the flexibility to privately negotiate lower prices with customers.
Take a look at the differences between the following:
- MAP vs. MRP or UPP
- MAP vs. MSRP
- MAP vs. ADP
- MAP vs. RPM
- MAP vs. iMAP or eMAP
MAP vs. MRP or UPP
MRP is an acronym for “Minimum Retail Price.” Another version is “minimum resale price” or a “unilateral pricing policy” (UPP). MAP is not as comprehensive as MRP, but the latter addresses the minimum price an inventory can be sold, and not just the product advertised price.
MAP vs. ADP
ADP is an acronym for “authorized dealer program.” Though not a pricing policy, it’s a frequently used term to discuss product pricing. ADP explicitly defines retailers that should sell a brand’s inventory. Any seller that’s not part of the program needs to apply for approval before they can sell the brand’s product. ADP is used alongside any of the pricing policies.
On the other hand, the manufacturer’s suggested retail price (MSRP) doesn’t define who can or can’t sell a brand’s product. It outlines the penalties for violators of the minimum advertised price. It also details the processes to follow when you want to terminate seller relationships for abusing your pricing template.
MAP vs. RPM
RPM means “Retail Price Maintenance.” This term is used to describe how brands maintain their pricing policies. Regardless of the pricing policy you choose, RPM is an integral part of the pricing policy. Violators will take advantage of you if you don’t enforce your pricing policy. And that’s why you need a good MAP policy to “nail” violators.
MAP vs. iMAP or eMAP
When discussing product pricing, you will sometimes hear people talk about electronic minimum advertised price (eMAP) or Internet minimum advertised price (iMAP). While an iMAP addresses product prices advertised online, eMAP addresses all e-communication channels. MAP pricing is more comprehensive than these two policies, as it covers all prints, digital, and physical channels retailers may use to list product pricing.
While many of these terms are used interchangeably, they mean specific processes and policies, and their differences are important.
When do you need a MAP policy?
One of the biggest reasons every brand should establish a MAP policy is to get rid of harmful sellers and protect their pricing templates. Without the minimum advertised pricing policy, there would be:
- To many unknown sellers.
- Too many sellers in a specific niche market.
- Different prices for an inventory.
Establishing a MAP policy helps you resolve the above challenges. As you implement your MAP policy, any retail that cannot comply with your pricing template will lose the right to sell your products (assuming that’s one of the penalties you have spelled out in your MAP policy). Over time, customers will trust your brand and products as only good retailers will remain.
When too many sellers cluster in one marketplace, the inevitable is bound to happen; one of the sellers will find a way to circumvent your pricing regime. And that’s because violating your pricing is the only way for less popular sellers or new sellers to stand out from the crowd.
Similarly, the same unfortunate scenario will likely play out when too many unknown sellers hit the market. Unknown sellers will not care about honoring your brand since they don’t have any personal relationship with you. They also do not care whether or not you will enforce your policies to penalize them, so they lower your product pricing arbitrarily and thus cause the race-to-the-bottom.
Good retailers – those loyal to your brand – will be left with no option but to complain about the excessive product price manipulation by abusing sellers.
The good retailers will certainly lose sales if they don’t drop their price, and if they do, the bottom line or margins will be reduced. This is not a good spot, so they will reach out to you to take action against those sellers playing games with your pricing template. And that’s where the MAP policy comes in.
How do you establish a MAP policy?
Establishing and formalizing a MAP policy for your brand is a complex legal process; you need to work hand-in-hand with a competent lawyer. Remember, the MAP policy is a legal document that details the processes of terminating a recalcitrant seller or applying punitive measures to forestall price manipulation. You need to get it right with your MAP policy, as pricing violations can result in a lawsuit if mishandled.
The lawyer you hire or work with will help you to:
- Define appropriate penalties.
- Write the policy succinctly
- Define is/not a violation.
- Explain the consequences of misusing the policy and how to handle appeals.
- The lawyer will also help you outline handling “false positives.”
When you start to enforce the MAP policy, affected sellers will want to contest whether or not a violation occurred. If a violation occurred, they would want to know if they are truly the cause of the violation. While enforcing the MAP policy, you can’t show any favoritism; you must be consistent in applying your policy.
I have seen brands downloading a boilerplate policy they found online and using it without any adjustments, and this is a bad practice. Your MAP policy should be unique to your brand, meaning, the lawyer should help you spell out the right penalties to give retailers flexibility.
Your needs will naturally change as your business evolves and your brand expands. Your lawyer should factor in the expected changes in the future. It is also worth mentioning that you should include your retail partners in the whole process, especially the good ones. Good retailers will help you identify areas of frustration that your MAP policy can address. They like the MAP policy because it protects them from rogue sellers.
Generally, creating a good MAP policy can take up to 3 months, depending on the nature of the problems you seek to address, how well you understand the problems, and the size of your brand. If you operate a big brand, it could take a longer time.
How do you enforce a MAP policy?
You must enforce your MAP policy; otherwise, your pricing template would be a mere suggestion. There won’t be any consequences for violating your MAP policy, so sellers will be comfortable ignoring it. Once your retail partners begin to ignore your minimum advertised price, the good ones among them will, too.
To enforce your MAP policy, there are some pertinent questions you need to answer genuinely. The questions are:
- Who will do the enforcement?
- What do you have the capacity to enforce?
- How will you know when a seller violates your policy?
Let’s analyze these questions in detail:
Who will do the enforcement?
Appointing an experienced person who should enforce your MAP policy is a no-brainer, and you shouldn’t leave this position to an intern or an entry-level employee. The MAP policy enforcer should be someone who understands the consequences of pricing violations and values your brand.
The role could be a full-time job if you have lots of SKUs.
The enforcer will likely record more pricing violations than they can follow up on. Therefore, they should pay more attention to violations that can damage your brand’s reputation. Part of the enforcer’s responsibility would be to build solid relationships with your sellers. So, who will you appoint to represent your brand in these situations?
Can your business handle enforcing the policy?
If you have lots of online retailers or a large product catalog, you’re likely to record more pricing violations in a single day than you have the energy to respond to. I suggest you only pay attention to violations and SKUs that can cause the most damage to your brand and then leave the rest to posterity. While this may sound crazy, there are so many things to consider:
- The moment you begin to enforce your MAP policy on violations and SKUs that can cause the most damage to your brand, there will be fewer violations on your other SKUs.
- Why waste time enforcing minor violations when too many sellers violate your most important SKUs.
Ultimately, the whole essence of enforcing your MAP policy is to reduce future violations to the barest minimum. It’s practically impossible to enforce every single violation you record, but you can take steps to eliminate sellers who violate your policy the most. You can also take steps to make your sellers feel uneasy when they attempt to abuse your prices. Document your MAP policy so that everyone receives the same information and is on the same page.
How will you know when a violation has occurred?
One way to know if an infraction or a violation has occurred is through MAP monitoring. Tracking all of your SKUs manually is incredibly inefficient. And that’s why most brands use software solutions to automate the processes.
The best MAP monitoring software will help you monitor your SKUs across the web and find violators while you decide how to respond to them. The software will retrieve pricing information several times a day, ensuring that you catch as many violators as possible.
How do you maintain your MAP policy?
It’s bad to establish a MAP policy and leave it to gather dust. Remember, it takes months to develop one, and it’s a full-time job to set the enforcement rolling, so you need to maintain your MAP policy to evolve with your brand.
As new products hit the market, your product pricing is likely to change. To stay on top of your MAP policies, you need to periodically ask:
- Do you have more capacity to enforce more SKUs?
- Are your current SKUs still important in today’s market reality?
- Are there new business challenges you need to solve?
A MAP policy isn’t static. It’s a dynamic document that must reflect the reality of today’s market. So, ensure that as your business grows, you take steps to evolve your MAP policy.
5 MAP policy samples for download
If you do a google search for “MAP policy .pdf” you will find a lot of examples you can use for reference and to learn how to use MAP pricing the proper way.
Here are 5 samples that had good variations from each other to use for learning.
Carbon Drive – Why we like this MAP pricing and policy
- Organized into different sections
- Very clear what the policy is
- Covers all sections of MAP pricing
Chef Works – Why we like this MAP pricing and policy
- Professional document gives credibility and seriousness
- Written with legal verbiage
- Signing page seals the deal
Inroad Toys – Why we like this MAP policy
- Short and simple
- MAP agreement confirmation page is clear
Mifab – Why we like this MAP policy
- Includes a breakdown of the price and also IMAP
- Provides different pricing for US and Canada
Miracle Tree – Why we like this MAP pricing
- 1 pager
- Number format is easy to understand and clear on the requirements
Protect your price
In reality, MAP pricing and policies can be controversial. On the one hand, it gives manufacturers and brands absolute control over their product pricing. On the other hand, the minimum advertised price restricts free competition among retailers. If you have numerous retail partners or a large product catalog, it might be difficult to keep track of your SKU. And even with loyal retailers, there will be more violations that you can follow up on.
Regardless of what you think about a MAP policy, it’s an important factor if you want to operate successfully in the United States. It should be at the top of your priority when looking to launch your pricing and marketing campaigns, as it can significantly affect your business.
What do you think about MAP pricing?
Frequently Asked Questions
What does MAP pricing mean on Amazon?
MAP policies are federally-regulated retail laws promulgated to impact sellers online and across brick and mortar retail environments. The suggested retail price defines the lowest price retailers can sell a product.
Is MAP pricing legal?
MAP pricing is legal in the US under antitrust laws, and the policy has been operational even before the eCommerce space started gaining traction.
Who sets MAP pricing?
The manufacturer is responsible for setting the MAP pricing, and it is expected of retailers to comply with the policy.
Can you sell below MAP pricing?
No, you can’t sell below your MAP pricing as pegged by the manufacturer. If you’re selling on the Amazon marketplace, you must respect the pricing decision.
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