MAP Pricing

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halden.doerge said:
Well, that's certainly Amazon's position on the issue. :D
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One of the reasons I try to use amazon as little as possible. Not only are they constantly getting (rightfully so) bad press about working conditions, but they also have a habit of killing off small market place stores or interfere with their business.

As for MAP Pricing, I think they should get rid of it, a dealer has little incentive to go below that because most customers won't ask about lower prices (the casual knife shopper) and if they sell the majority of stuff at MAP there is no reason to go below it for the occasional person who asks for it. As mentioned above, smaller shops where you buy more frequently have more reason to keep you as a customer I basically am down to three shops I buy from:
1. The cheapest and good shipping
2. A little more diverse and a bit closer, a kind of Mom&Pop Brick an Mortar store, not the cheapest but definitely the nicest interaction and gives some PreOrder Discount and holds knives for me if I ask (doesn't advertise it)
3. ZT Dealer, good prices and good communications

So they all have something going on for them. Shopping around certainly is a good idea for everything.
 
22-rimfire said:
I also agree about Condor and MAP. They set the bar too high. It is to the point that I simply buy other brands. As most of you know, I really like Condor stuff, but my purchases since MAP started can be counted as "one".
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I mean, at least in most cases factoring the upcharge for the additional grinding work I do on 'em negates the price increase, but I'm just a small account, and when most other retailers can't bundle add-on services the way I do, it has an overall smothering effect on sales. People aren't going to find my Condor offerings if people aren't even looking in the first place, you know? I've definitely not needed to stock so much inventory as I used to, as a result. It's a perfect example of why MAP often gets a bad reputation. When done right, it should simply set a reasonable floor that's still viable for discount volume sellers without making the margins so stupid-small that folks in the mid-range of the pricing spectrum feel overly squeezed by it. Think of MAP as sort of being like the Fed influencing the economy by adjusting interest rates. Do it right and it can stimulate an economy. Do it wrong and it can really put the brakes on it, or even cause a crash.
 
I find it interesting that folks are hating on MAP and Amazon at the same time when the entire reason many manufacturers are using MAP is to prevent Amazon from cornering the market on everything.

Amazon has low overhead enormous buying power and can easily undercut local and smaller retailers. MAP equalizers Amazon and the local/smaller folks. Smaller dealers were likely complaining that they couldn't make any money trying to compete with Amazon and requested MAP to maintain their ability to make money.
 
There is an active duty and veterans retail website that has a couple brands below MAP.
 
For some of the MAAP Companies- what I've heard from several sources is: The store can't advertise below MAAP, if they have a "add to cart for special price" or call in for price- that's fine, but (Knife company X) will no longer sell to them. I've even heard that they'll have Company reps call the store to ask for lower pricing and if the retailer gives it they'll be no longer welcome to sell said knife products.
 
pyreaux said:
I find it interesting that folks are hating on MAP and Amazon at the same time when the entire reason many manufacturers are using MAP is to prevent Amazon from cornering the market on everything.

Amazon has low overhead enormous buying power and can easily undercut local and smaller retailers. MAP equalizers Amazon and the local/smaller folks. Smaller dealers were likely complaining that they couldn't make any money trying to compete with Amazon and requested MAP to maintain their ability to make money.
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That's exactly my point.
 
MAP is a good concept but often enforced in an unrealistic and unreasonable way. The spider, but mostly the butterfly, have terribly high MAP prices adjustments every year or so that does not follow the income progress of their core customers. My 2 cents.
 
HappyDaddy said:
If you're talking about the policies of companies like KAI, Benchmade, Spyderco, etc., its's actually a combination of MAP and the Colgate Doctrine. Colgate is the practice whereby the manufacturer announces the minimum prices at which its products can be sold and refuses to do business with anyone who won't agree to that. That is a lawful practice and isn't a violation of the federal antitrust laws.
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Thank you. Dealers can sell at whatever they want and manufacturers can agree to sell to whichever dealers they won't. If dealers don't want to sell at the price they desire their products sold then they can chose to not sell their products to dealers who don't agree. Simple.

It's not really a map issue.
 
I would think that MAP helps out people who live near by specialty knife shops. I mostly order from the internet since there isn't one near me and to me MAP really doesn't help the smaller stores at all since big box retailers and Amazon are going to have specialty stores beat on shipping and return policies anyways. The possibility of doing a pickup through the big box/Amazon locker also reduces the chances of being left out of luck if anything gets damaged or goes missing in transit.
 
craytab said:
...It's not really a map issue.
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I think it is actually. I am not against MAP (pricing), I just feel that it needs to be reasonable relative to dealer cost for the brand and their customer base. Conceptually I agree with the concept of MAP. It allows small dealers to be able to compete favorably with the big merchants. I also don't think retailers should discount below MAP if they carry the brand unless it is some sort of closeout.
 
I pretty much quit buying Benchmade, Zero Tolerance, and now Spyderco, due to MAP pricing.

As far as it being the price basement, that excuse is BS! It is price fixing, plain and simple. I don’t want to even hear that the corrupt court system has approved it, either. It is anti-competitive and violates the free market system. If retail stores cannot compete without fixing prices then they need to get the hell out of the business. It is a cutthroat business.
 
ndmiller said:
It is illegal for wholesalers, manufacturer to dictate pricing to retailers, although they can incent "advertising prices" through kickbacks or other incentives a retailer would lose if they advertise below the threshold outside of an allowed window. The affect is very similar to the consumer, but retailers are always allowed to price however they want. On the subject of Colgate Doctrine, a wholesaler/manufacture can do business with whoever they choose, but......A wholesaler/manufacture that pulls product from a retailer based sales price would be a punitive action based on pricing, therefore fitting the definition of illegal price fixing. "Price it this way or else" is price fixing pure and simple. Very hard to get away with in the instant information age we are in, although before the internet, was much easier, albeit could only shop locally in catalogs so didn't matter much.

In practice if you walk into a shop carrying product under map pricing they can sell at any price they want, but the signs on the products, store windows, print/radio/online advertisements and the like would most likely not break map pricing outside the allowed window. Could you ask the shop owner for a better price, sure, does he/she have to give it, certainly not, regardless of any map pricing agreements he/she is under.
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The Colgate Doctrine is what makes “retail price maintenance” lawful. Horizontal price fixing is always an antitrust violation. Vertical “price fixing,” if done in compliance with the Colgate Doctrine, isn’t unlawful. A manufacturer can absolutely refuse to sell to a retailer who refuses to comply with its announced minimum prices.
 
Daniel said:
I pretty much quit buying Benchmade, Zero Tolerance, and now Spyderco, due to MAP pricing.

As far as it being the price basement, that excuse is BS! It is price fixing, plain and simple. I don’t want to even hear that the corrupt court system has approved it, either. It is anti-competitive and violates the free market system. If retail stores cannot compete without fixing prices then they need to get the hell out of the business. It is a cutthroat business.
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Respectfully, statements like this demonstrate with crystal clarity that you don't understand the dynamics at work in the situation. It is a LOT more complicated than that.
 
Dealer cost is actually the rub. If I were a dealer, if I can buy and sell 1,000 units of the same item versus a small Mom & Pop knife store that buys 10 units, I think I should get a better price per unit. But, with MAP pricing, it just means I make a higher margin above cost as compared to the small retailer. Not saying this is good or bad, but the Mom & Pop is able to sell that brand at "competitive" prices. I'm okay with this.

Sams Club and Costco were initially set up as sort of a middle man to small retailers. That distinction has been watered down significantly as time passes. I think with knives, things are shipped directly from the manufacturer except for operations like Blue Ridge Knives that serves as a middle man/distributor.
 
FortyTwoBlades said:
Respectfully, statements like this demonstrate with crystal clarity that you don't understand the dynamics at work in the situation. It is a LOT more complicated than that.
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You are exactly right. I’d go one step further and say that he has it precisely backwards. Retail Price Maintenance actually tends to be pro-competitive at the retail level.
 
FortyTwoBlades said:
MAP is a tool, and not wholly bad nor good. It's all in how it's applied. It greatly assists in growing distribution because it establishes a minimum margin to the retailer so that the big guys in the market who can afford to sell puny amounts above wholesale cost for the sake of being market price-leaders aren't able to just scoop up all the sales. This makes a retailer feel that the product is a safe investment for them. However, if MAP is set too high, it can impact the competitiveness of the product negatively, especially depending on the company's market positioning. I feel that Spyderco has implemented MAP well, as it's pretty low. Condor, on the other hand, has set the MAP bar too high. Their positioning as a value brand is kind of confounded by their insistence on high MAP. It's the reason why I switched to offering all of my Special Grade work on Condors for free, to offset the value ratio, but most other retailers aren't in a position to do something like that.
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Thank you for your post from a retailers view. It is appreciated. I have a question for you as a retailer. While you cannot advertise the product for less, do you, if requested by a customer, sell for less than MAP?
 
Anyone supporting MAP pricing is most likely a dealer. What a wonderful way to support your profit margins by guaranteeing your retail price. If you cannot manage your cost structure to be price competitive in the retail market, then you should not be in business. I completely understand the “dynamics at work” here. You cannot manage your business to make a profit so you whine to the manufacturer that you cannot compete with the big boys. Tough luck buddy.

A company needs to set their prices according to their cost structure. If it cannot be competitive by price, then be competitive through service. If you cannot make a buck, then you most likely suck. Get out of the business and let those businesses that can deliver the goods to the consumer at the lowest possible price while providing sufficient service by managing their costs and not by the manufacturer setting selling prices. The manufacturer should set their prices for their products based on their cost of production and stay out of setting retail price. Sure, they can state “suggested price”, but it should be up to the retailer to set the selling price unrestricted by the manufacturer. FREE MARKET
 
Daniel said:
Anyone supporting MAP pricing is most likely a dealer. What a wonderful way to support your profit margins by guaranteeing your retail price. If you cannot manage your cost structure to be price competitive in the retail market, then you should not be in business. I completely understand the “dynamics at work” here. You cannot manage your business to make a profit so you whine to the manufacturer that you cannot compete with the big boys. Tough luck buddy.

A company needs to set their prices according to their cost structure. If it cannot be competitive by price, then be competitive through service. If you cannot make a buck, then you most likely suck. Get out of the business and let those businesses that can deliver the goods to the consumer at the lowest possible price while providing sufficient service by managing their costs and not by the manufacturer setting selling prices. The manufacturer should set their prices for their products based on their cost of production and stay out of setting retail price. Sure, they can state “suggested price”, but it should be up to the retailer to set the selling price unrestricted by the manufacturer. FREE MARKET
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To be clear, I actually have a degree in business management and entrepreneurship. The things you are saying here are clearly from an outsider perspective. Being able to tell the time on the face of a clock is not the same as being a clockmaker. There are many delicately balanced moving parts and pieces in any given market. Being a price leader is only one of a great many possible strategies for carving out a niche in the marketplace. The greatest advantage of MAP pricing is to protect the manufacturer. It's what's known as a "pull strategy" that entices dealers to carry their product, broadening their market reach. And there's a lot more to it than that, but I'm afraid I don't have time to type out a full intro course on marketing strategy. Fortunately there are a great many excellent resources for this information free online if you choose to seek them out. If you're really gung-ho about learning about these sorts of things, I suggest buying a textbook to a current college course on the subject. A great way to get textbooks inexpensively is to purchase the international edition of the book. Typically only a few tiny things are changed compared to the domestic market version of the book, and they're a fraction of the cost.
 
DavidZ said:
Thank you for your post from a retailers view. It is appreciated. I have a question for you as a retailer. While you cannot advertise the product for less, do you, if requested by a customer, sell for less than MAP?
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That depends on the particular company. Most of the MAP products I stock are obtained through distributors rather than direct from the manufacturer, so I would have to review the particular manufacturer's MAP policy before I'd feel comfortable with selling below MAP, such as not to put my supply chain at risk. Usually offering a value-added service for free or at discount is the best way to get around MAP issues, like offering free shipping or a discount on a non-MAP item purchased at the same time.
 
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