How MAP Pricing Might Impact Your Home Dropshipping Business
Did you know that MAP pricing might impact your home dropshipping
It can. If you aren’t familiar with this whole subject to MAP pricing, it will benefit you to learn about it so that you follow best business practices.
First of all, what is Map pricing, anyway?
Here is a brief explanation of MAP pricing from consumerist.com
“Minimum Advertised Price is an agreement between suppliers and retailers stipulating the lowest price an item is allowed to be advertised at. If you’ve ever tried to shop around and keep nosing up against the same number, you may have just discovered that good’s MAP. This is why sometimes you see signs that say “price too low to advertise!”
Or why when shopping online, sometimes the price doesn’t show up until further in the transaction process. Retailers can incur sizable fines and/or penalties from their suppliers for violating MAP contracts.”
So, MAP pricing refers to the minimum price you can advertise for a certain product. As you read above, there can be serious legal repercussions if you don’t adhere to these rules and who wants that?
One important thing to understand is that MAP pricing might be even more critical to online sales, or e-tail merchants, than traditional brick and mortar retail establishments. Why? Simply because it is a lot easier for shoppers to comparison price online in the virtual world when they can do it with a few clicks of their mouse, than in the real world where someone would have to drive to or call each store to check pricing.
In other words, it would be easier to get caught online, so don’t go there.
Here are some of the ways MAP pricing might impact your ecommerce home dropshipping business.
You need to understand that although MAP pricing limit’s the price you can advertise for some items, it doesn’t affect the price you choose to sell them for, as long as this price is unadvertised. You want to be careful with this, though. If you undercut the MSRP or Manufacturer’s Suggested Retail Price by a whole lot, you will be shooting yourself in the foot by severely limiting your profits. This is certainly not a good way to run a profitable business.
In some cases, you can advertise a coupon code that will lower the price of an item, even if it takes it below the MAP. Just remember to advertise the coupons code itself and not the price of the widget after the coupon code is applied.
According to U.S. Circuit Courts and FTC rulings, once the product has been added to a customer’s shopping cart and the coupon code applied, even if the product is now below the MAP, it is okay because the shopping cart is private and unique to that particular customer, so the final price wasn’t advertised.
If you are in doubts about MAP pricing
, it might be a good idea to ask an attorney before you violate the rules and land yourself and your home dropshipping business in a lot of trouble!