Legal Briefs Podcast: Can You Set Different MAP Prices for Different Retailers?

Tying MAP to MSRP isn't price-fixing, and different retailers can sometimes get different MAP prices, but only when there's a real business reason behind the difference. Jeremy Richardson draws the line.

Setting the actual MAP price is one of the more practical questions brands face, and Jeremy Richardson starts by putting to rest a myth: tying MAP to a manufacturer's suggested retail price isn't a backdoor form of price fixing, as long as the brand is clear that MSRP is a suggestion and the retailer still controls the real sale price.

The harder question is whether a brand can set a different MAP price for different retailers selling the identical product. Jeremy's answer is nuanced: yes, but only with a legitimate business reason: genuine product differentiation (different packaging, branding, or quality tier), or a defensible distinction between retailer types, like e-commerce versus brick-and-mortar, where real cost differences exist. Setting a different MAP price for the exact same product sold through two comparable retailers, with no distinguishing factor, is where Jeremy says he'd get uncomfortable advising a client to proceed.

• MSRP-based MAP is fine. As long as the brand makes clear MSRP is only a suggestion and the retailer sets the actual sale price.
• Different MAP prices need a legitimate reason: product differentiation, packaging, or a real cost distinction between retailer types (e.g., e-commerce vs. brick-and-mortar).
• Same product, same channel type, no distinction? Don't differentiate MAP. That's the scenario Jeremy flags as legally uncomfortable.
• Wholesale pricing is separate: volume discounts off wholesale are generally fine, but shouldn't become the basis for setting different MAP prices to different retailers.

Full Episode Transcript

[00:00] Welcome to MapTrap's legal briefs, the podcast where we explore specific strategies and tactics used by brands to protect their pricing, distribution, and intellectual property. The information in this podcast is provided for general informational purposes only. It is not legal advice. Listening to this podcast does not create an attorney-client relationship between you and MapTrap's guest presenters. Listeners should seek legal advice from a lawyer licensed in the listener's state.

[00:35] Hey there, welcome back again for another episode of legal briefs where we have discussions about online brand protection. We're here with Jeremy Richardson.

[00:44] Hi Jeremy. Iran, how you doing?

[00:46] Doing great. Doing great. A topic that we wanted to talk about, a lot of our clients have questions, is about map pricing, right?

[00:58] Minimum advertised price, setting that price, enforcing that price, and there's a couple of pieces to this. One is that we understand that a brand can choose which products they have under map. They don't have to have it all of their products. And that they can change the prices whenever they want. But the question is, can they have a different map price for a different seller?

[01:30] But before we go into that, maybe you could give some insight on a good way to actually choose a map price. Sure. So a bunch of questions there and interesting topics as always. How do we set the map price?

[01:48] I have had a number of clients who have used the MSRP, that is the manufacturer's suggested retail price, either as the map price or as a key to the map price. So maybe a 10% discount off MSRP would then be the map price. I have other clients who really don't tie the map price to MSRP and that's fine too. I have a number of clients who choose specific products. Sometimes it's the core of their product line that gets a map price. And sometimes it's outside of the core, the really sort of unusual or special items that a company may be offering, they may be seasonal, they may be less than a full production run, smaller MOQs that get the map pricing. So it really goes in all sorts of different ways. Okay. So you're saying that a manufacturer can use MSRP, we've heard other arguments that MSRP and maps should have no relationship to one another because it's a thinly veiled attempted price fixing. Have you ever heard that?

[03:08] So I have not heard that particular argument and I actually think that is not right. Look, there's an important part of MSRP and that's the S, that is the suggested. The manufacturer is suggesting what the retail price should be, but you're absolutely right to raise this issue of price fixing. The manufacturer is not setting the retail price, that's very, very important. We never want to be telling a retailer what they must charge the end user, the customer because that would be a violation of federal law and many state laws. So we definitely want to avoid that. But when we are tying the minimum advertised purchase price to the manufacturer's suggested retail price, I don't see an issue with that, I don't think it is an attempted price fixing. As long as we're clear that it is a suggested retail price and we are definitely telling the retailers that they set the actual retail price, we the manufacturer do not. Okay.

[04:18] Thank you for that. So then back over to the selective map pricing question, when it comes to retailers, can the manufacturers say to bigboxstore.com that their map price is A but then to specialty onlinestore.com that they have a higher map?

[04:43] So I think the answer is yes, in most situations, but I want to be clear that you want to have a legitimate business purpose for setting different minimum advertised prices. That may be a product differentiation. You may have, if we're talking about cement bags, a 25 pound cement bag versus a 20 pound, you may be suggesting different prices for those. And the price may not be a perfect formula based upon the cost per pound, right?

[05:19] So you differentiate your product. You may have a different brand name. You may be having different packaging. You may have different quality levels. And in those situations, I think it's absolutely fine and even appropriate to set different minimum advertised prices as well as different MSRP's. But those are different products. Yes, they're not the same product. You're saying that you should change the product and have a different price for the luxury version versus the mass market version, correct?

[05:56] Yeah, I think that's exactly right. And again, you want to have a legitimate business reason for changing or setting a different minimum advertised price and a different manufacturer suggested retail price. If you're selling the exact same product to two different retailers, one is big box and one is luxury, there's absolutely no distinction between them. I would be uncomfortable telling a client that they could suggest a different price or set a different minimum advertised purchase price. If they're the same product, same packaging up and down the line, it makes me feel uncomfortable when you're talking about retailers who are both brick and mortar, maybe different levels, but essentially in the same category. There may be a difference when we talk about different types of retailers when we're talking about, say, e-commerce versus brick and mortar. There, I would feel better about setting the MSRP and the map price differently because there are legitimate reasons for having different suggested retail prices and different map prices for different categories of retailers. So that makes me think that if you're charging a different wholesale cost, but your map price is, say, double wholesale, right, which is key stoning, a lot of companies will use that to set MSRP. So if you're going to keystone from wholesale, then that would necessarily create a different map price for different retailers. Is that okay?

[07:45] So we're getting into a different area, and I want to be careful here, when we talk about the wholesale price, we have to charge the same wholesale price across the board. There are legitimate business reasons for giving discounts off the wholesale price, which are okay. And again, retailers should check with lawyers in their particular jurisdiction to make sure it's legal in their state or their locality. But typically speaking, legitimate business reasons for giving a discount might be a volume discount. Look, it's less expensive, I believe, for a manufacturer to load up an entire container and send it off to a distribution center as opposed to ones and twos or fives going to a smaller retailer that doesn't take a full container load, right?

[08:39] Those are shipping costs differences, and you pass those on or set your price accordingly. So legitimate reasons for giving discounts, I think, could apply similarly to setting the map price. But I typically would caution against setting your map price off of the wholesale price if you're giving volume discounts to certain retailers and not others. Okay, I think that we understand a little bit more about map pricing and selective map pricing. So thank you very much Jeremy. It's my pleasure.

[09:19] Thanks Ron. And I hope you have a great day. If you'd like to submit a question or topic for a legal briefs podcast, email them to legal briefs at maptrap.com. For more information about how maptrap can help you with your online brand protection needs, visit www.maptrap.com.