At PriceSpider, we create price protection software to help brands monitor and enforce their product pricing everywhere it appears. As a result, we get a lot of questions about pricing policies—particularly MAP policies.
Manufacturers often have questions about how to create, implement, and enforce their MAP policies. If you’re just getting started with pricing policies and feeling confused, you’re not alone. We’ve pulled together some of the common questions brands ask along with quick answers. Don’t see your question answered here? Contact us. We’d be happy to help.
What is a MAP policy?
MAP stands for “minimum advertised price.” Your MAP policy establishes the lowest price point a seller can publicly list your product for, online or on physical assets like advertisements and price tags. It’s a unilateral policy, which means your sellers don’t sign anything or “agree” to follow it. However, it does outline the process you will use to penalize retailers or even terminate relationships with sellers who don’t follow the policy.
Think of it like a “No shirt, no shoes, no service” sign. It’s a notice that if sellers don’t comply with your pricing, there will be consequences.
Why does my brand need a MAP policy?
Good retail partners don’t always need a pricing policy to respect the prices you recommend. But it’s important to remember, your MSRP (manufacturer’s suggested retail price) isn’t a policy or enforceable price. As the name implies, it’s a suggestion, designed to help consumers gauge the value of your product.
A MAP policy is designed to protect the value of your products—and by extension, your brand. Without one, a single bad seller can permanently damage the perceived value of your product. When they slash prices, other sellers have to follow suit to stay competitive, and this price erosion often continues until no one is profiting from selling your product (including you).
MAP policies give brands a legal mechanism for reducing the damage bad sellers can cause and reducing the likelihood that bad sellers will try to play games with your pricing.
Are pricing agreements legal in the United States?
A pricing policy is not a pricing agreement. But pricing agreements are not necessarily illegal in the United States. In 1890, congress passed the Sherman Act, which prohibits “every contract, combination, or conspiracy in restraint of trade” (among other things), but it left it to the courts to decide how to apply this on a more case-by-case basis. A pricing agreement has historically been seen as an unlawful contract which restricts competition. But in 2006, in the Leegin decision, the Supreme Court ruled that pricing agreements don’t always violate federal antitrust laws. However, many states have antitrust laws of their own, and depending on the circumstances, a pricing agreement can still violate federal laws.
What’s the difference between a pricing policy and a pricing agreement?
The biggest difference between a pricing agreement and a pricing policy is that your pricing policy is unilateral. No one “agrees” to it. Your sellers don’t play a role in shaping it or helping you enforce it. And just as importantly: you have to apply your pricing policy equally to all retail partners. There’s no room for favoritism or partiality, regardless of your relationships with your sellers.
What counts as the “advertised” price?
Part of establishing your minimum advertised price policy is defining what “advertised” means to your organization. The price someone pays isn’t necessarily the price that was advertised to them. Will your policy allow sellers to say things like “add to cart to see price” or “call for price” if they want to go lower than your minimum price? Can retailers or sales staff offer discounts at checkout? That’s up to you.
The key is to make sure that,however you define the “advertised” price, you can identify when any seller violates your policy. You need to check in-cart prices and run discounts at checkout for every seller. If you rely on employees for this process, you’re bound to miss some violations, which opens you up to criticism that your policy is not being equally applied.
What happens if someone violates my policy?
Your policy should define exactly how you’ll respond to violations. You should work with an antitrust lawyer to talk through the goals for your policy and establish appropriate consequences for sellers who violate it. Typically, manufacturers use a progression system to give sellers “strikes” for violations, where the more strikes a seller accrues, the more serious their consequences are. Depending on your goals, somewhere around three to five strikes may result in terminating your relationship with the seller.
Price protection software like PROWL may provide an automated process or templated messages for you to notify sellers about their violations.
Can I call a seller if they violate my pricing policy?
When you have a good relationship with a seller (or want to develop one), it’s always tempting to call them about violations, rather than using less personal communication channels. But this can get you in trouble.
Unless you’re recording your calls, there’s no record of that communication, so it’s impossible for you to prove what was or was not said to a particular seller. Choosing to call a seller instead of using another channel also creates a perception of bias if you don’t call every other seller. So if one seller receives an automated email from you, but they know another seller got a personal phone call, they can make a case that you’ve been playing favorites. And if you can’t definitively disprove that, you’re going to have issues.
The safest decision is always to use channels where you can easily track communications and keep records.
What if someone appeals their violation?
Since your MAP policy penalizes sellers who violate it, when you start enforcing your policy, some sellers will appeal. They’re going to tell you someone else violated your policy first. Or that it was an automated process they didn’t catch. Or a human error. It could’ve been a mistake on your end, too.
Regardless of how compelling someone’s case is, your MAP policy and internal processes need to clearly define what the appeal process looks like and ensure that you’ll be consistent about how you respond. Make sure that this process is formal, written, and clearly defined, so that employees won’t ever be left to navigate appeals on their own.
Ideally, any appeal should be directed to your legal counsel. That’s the safest way to ensure you don’t get your organization into legal trouble by risking the appearance of favoritism.
How do I even know when violations occur?
A MAP policy can’t do much good if you can’t enforce it. The more SKUs you have to monitor, and the more sellers that carry your products, the more overwhelming MAP enforcement becomes.
Some brands think they can manually protect their price by periodically checking on their product pages. But even with just a handful of SKUs and a couple of sellers, relying on a manual process means you’re bound to miss violations.
Price protection software automatically monitors your SKUs everywhere they appear. Most programs crawl retailers’ websites on particular days of the week, or at best, once per day. When they find a price that violates your policy, they automatically notify you and give your team a dashboard to see what it found. This is far better than relying on a manual process, but when your price protection software runs at predictable intervals, it leaves opportunities for sellers to violate your policy without being detected.
PROWL crawls retailers’ websites six to eight times per day, so if a seller violates your price, you’ll know about it right away. PROWL also lets you automate the process of responding to violations, so your employees can spend more time on tasks that require their expertise.