MAP Pricing

[Someone1]

The manufacturer can sell to whoever they want for whatever price they want and can get, from the distributor, retailer or even the final consumer. If they only want to sell to only Mom and Pop brick and mortar stores then they should. However, when they sell it, it is no longer their product.
The distributor, retailer, or consumer should be able to do the same to their customers without overreach from the manufacturer.
Free Markets.

So then why do warranties exist? Once they sell the product, you're saying it should no longer be their concern...

You can't have it both ways. Either the company can add stipulations that affect the product after the sale or they can't.

 

[FortyTwoBlades]

So there are manufacturers or distributors that forbid you from selling for less than MAP? That is price fixing.

It's a matter of making sure that the manner I go about it is in compliance with policy. It's a best management practice to look before leaping. And remember, as noted earlier in the thread, price fixing is when competitors conspire to sell goods at a certain price. William Henry, if I remember correctly, doesn't even do MAP--they outright state what the sales price is and if you violate that policy and sell below it for any reason they cut you off.

 

[22-rimfire]

We all like to believe in Free Markets for goods and services, especially if you live in the USA. Worldwide, markets are not free. You have currency fixing in China, VAP taxation in Europe, tariffs both for import and export..... the markets are not free no matter how much you believe they should be.

I bought a new truck (Toyota) about a year ago now. When shopping what I found is that the price was fixed and for the most part very rigid. Price fixing? Technically I could have found a dealer somewhere that would do business differently, but not in my region for the most part. Ultimately it was a brand choice.... Brand choice is where the competition comes in with MAP (pricing). The consumer has the power ultimately. But if you want a Benchmade, you most likely will pay MAP.

 

[DavidZ]

So then why do warranties exist? Once they sell the product, you're saying it should no longer be their concern...

You can't have it both ways. Either the company can add stipulations that affect the product after the sale or they can't.

Your example is failed logic. The two do not equate. However let's use your example correctly. The manufacturer would now require every retailer to be responsible for any warranty claims. Would that be OK?

 

[DavidZ]

It's a matter of making sure that the manner I go about it is in compliance with policy. It's a best management practice to look before leaping. And remember, as noted earlier in the thread, price fixing is when competitors conspire to sell goods at a certain price. William Henry, if I remember correctly, doesn't even do MAP--they outright state what the sales price is and if you violate that policy and sell below it for any reason they cut you off.

This is an interesting point regarding WH. I wonder if they sell to everyone of their retailers at the same price, regardless of volume?
Price fixing is when competitors conspire together. When a manufacturer requires it of their retailers it is OK? Interesting distinction, but it is different. Thanks for your input. It is insightful! I am learning a lot here.

 

[Someone1]

Your example is failed logic. The two do not equate. However let's use your example correctly. The manufacturer would now require the retailer to be responsible for any warranty claims. Would that be OK?

I don't see a retailer accepting that demand, but sure, it would be okay if that demand was made by the manufacturer and accepted by the retailer.

You said that once the sale is made and the manufacturer delivers the product, the manufacturer should be done with the whole issue. I brought up warranties that dictate what to do and not do with a product after the sale is done. Why does it matter? Because if you want continued support from the company, you follow the stipulations they laid out prior to you buying the item. It's fine if you go outside of their terms, but don't expect them to continue their support. It's a free(ish) country and they can demand terms and you can accept or not and if not.

So it does matter. They have terms that protect themselves regarding warranties that apply after the sale. They have terms that apply to protect themselves regarding distribution that apply after the initial sale. The distributors are free to not honor the manufacturer's demands but if they want to continue doing business with the manufacturer, they will honor the demands.

So what's that have to do with price fixing? Well, is it price fixing? No. Is it market manipulation? Well, in as much as a company is protecting itself and its distribution chain and customers, sure. Is it predatory or immoral? No. Does it infringe on your rights as a customer? No. Are you forced to buy these products? No. Should you support these policies? It's up to you. Do you even have to see why they implement these policies? Well, we see that that's not the case. Should government step in? Not if you want even a semblance of freedom to make, buy, and sell products.

It's not hard to see why this is happening and it's not hard to see the pros and cons if one really tried to break away from a victim mentality so pervasive in society. Is it a great thing? Absolutely not. But what really is the issue? That a company is protecting itself, its distribution chain, and its customers from predatory business? No. That's not the problem. The problem is that some businesses are predatory and the necessary actions taken to defend against those predatory businesses are rarely easily defended when people seem think they're always the victim of something and place the blame at the wrong feet.

 

[Yo Mama]

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.

It's also how I knew I got a fake leatherman recently. Made it easy on them between where did I buy and for how much equaled fake.

 

[craytab]

So there are manufacturers or distributors that forbid you from selling for less than MAP? That is price fixing.

No. That is not price fixing.

Folks need to at least get their definitions correct if this is going to be a productive discussion. Oh, and S Someone1 needs to leave the political bs out of this. It helps nothing.

 

[craytab]

The market should decide the pricing.

It is. If a dealer sees no advantage to selling a brand at the requested price, they won't sell said brand. Free market. Simple.

 

[craytab]

Why should you care how much someone sells your knife for after they have paid you the price that you have agreed upon?

Your whole discussion does not really make any sense to me. If you want to control the retail prices on your product, then only direct sell to the end user.

If I buy your $200 knife and that price is fine by you and then I sell your knife for $150-how does it affect you and your business? If you think that your knives are worth $400, then you should be selling them for $400 and not making deals with purveyors. Perhaps, you do not feel that you have the expertise to sell your knives in the marketplace. That is ok, but you then have to pay the purveyor to market your knives to sell more than you can sell by yourself. This does not mean that you get to control the price to the end user.

If you tried to make that a requirement to me, I would tell you good luck with your sales.

It's called marketing. Strengthening the perceived value of your product.

 

[22-rimfire]

MAP impacts resale value quite a lot with products from manufacturers. The consumer benefits.

Market manipulation.... That's the ticket. It is not price fixing. As a manufacturer, you essentially impose standards on your dealers, and you enforce it.

When I moved into the neighborhood I currently live in, the main builder who developed the property imposed legal restrictions to the owners of the houses. The restrictions were enforced by the builder while the property was still being developed by them. Once they filled the neighborhood lots with houses, they could care less. On paper the restrictions probably still apply. But nobody enforces them. Market manipulation? Of course.

 

[Someone1]

No. That is not price fixing.

Folks need to at least get their definitions correct if this is going to be a productive discussion. Oh, and S Someone1 needs to leave the political bs out of this. It helps nothing.

While i don't like discussing politics that much on an internet forum, discussion of the why's and how's of economic and business policies kind of demands it. Unless no one really wants to get to the heart of the issue and people just want to argue for argument's sake.

 

[Eli Chaps]

A company does not have to lower their prices in selling to Amazon or Walmart. That is their choice because they know that they can increase their sales by selling to them. In fact, they do not have to even sell to them.

However, they should not be able to require Amazon or Walmart to have a price floor- MAP.

All of this discourse is moot. The courts have held that MAP pricing is not illegal. So, it is not going to change. However, it is not free market. The market is not determining the pricing structure.

I will still refrain from buying at MAP pricing. I buy on the secondary market, MARKET, where the prices are determined by actual value to the buyer. Or, I wait until knives go to clearance prices.

Whoa...It's almost like there is a market condition that is affecting your purchasing decisions and you're exercising your right to not buy particular products due to said market condition. Why, that sounds remarkably like a free market!

Do you people stand in line at the grocery store and try to negotiate prices too?

It is not price fixing and it is completely a free market. These policies encourage retailer competition in hopes of avoiding a total monopoly. Without the market players (manufacturers, distributors, etc.) finding legal and still consumer avoidable means of maintaining competition, the inevitable end conclusion are monopolies. And then there is no free market at all and the gouging can truly commence.

Amazon and WalMart institute horrible business practices and often sell products at huge losses. They do this as part of a free market and in response to what their competitors are doing. Their end-goal is a monopoly. I exercise my free market rights and refuse to provide business to either. And no, I don't make much money. I just recognize that people making my wares also have to put food on their tables.

The beauty is, we can all choose how, where and on what we spend our money. Sort of like, ya know, a free market.

 

[shinyedges]

I haven't bought mapp gas in awhile, what's the pricing issues everyone's in a tissy about?

 

[22-rimfire]

...Do you people stand in line at the grocery store and try to negotiate prices too?

It is not price fixing and it is completely a free market. These policies encourage retailer competition in hopes of avoiding a total monopoly. Without the market players (manufacturers, distributors, etc.) finding legal and still consumer avoidable means of maintaining competition, the inevitable end conclusion are monopolies. And then there is no free market at all and the gouging can truly commence.

Amazon and WalMart institute horrible business practices and often sell products at huge losses. They do this as part of a free market and in response to what their competitors are doing. Their end-goal is a monopoly. I exercise my free market rights and refuse to provide business to either. And no, I don't make much money. I just recognize that people making my wares also have to put food on their tables.

It is not monopoly.... it is all about market share. Both want to dominate, but there are competitors.

 

[Insipid Moniker]

While i don't like discussing politics that much on an internet forum, discussion of the why's and how's of economic and business policies kind of demands it. Unless no one really wants to get to the heart of the issue and people just want to argue for argument's sake.

Then perhaps you should familiarize yourself with the rules you agreed to when you signed up for the site. Political discussion on this forum is restricted to the Political Arena. Seeing as you don't have the proper membership level to discuss politics there, if you feel you can't discuss this topic without going into politics an easy alternative is to say nothing at all.

 

[22-rimfire]

Discussing politics is one of the best ways to get popped by the Moderators.

 

[Someone1]

There are anti-dumping laws that protect the economy. It keeps China or whoever from manufacturing and selling products in the US at a loss just long enough to destroy their competitors. Once their competitors go out of business, the foreign manufacturer is free to set whatever price they want.

Look at solar panels. They're a wildly popular product. China was manufacturing them and shipping them to the US and selling them at a huge loss which was putting all other solar panel manufacturers out of business. The government of China was subsidizing this practice in order to boost their own economy at the cost of everyone else's. Once all of their competitors who do not receive government subsidies go out of business, the Chinese businesses, and the Chinese government, are free to charge everyone in the world whatever they want for a wildly popular and oftentimes necessary product.

So trump instituted high tariffs on solar panels from china and ordered massive penalties against the companies dumping solar panels on the American market to protect Americans from the predatory Chinese government and companies. Short sighted consumers balk and whine and complain about higher prices because they don't see how business works. They want the lowest price possible even if it wrecks the economy. They're hurting their kids and grandkids by being selfish and stupid.

So controls are put into place to protect the health of the system. If the controls can be implemented by private individuals, so much the better because individuals almost operate more efficiently than the government.

But you always have the short sighted people complaining about prices. But if given their way then the system collapses into a monopolistic oligarchy where people have no other option than to deal with people who can and will gouge them.

If you question it just look at your electric bill. Do you have one option or several? If you have one option and one option only, i guarantee the price you pay for electricity is higher than people in a different area who can choose between providers.

What about startup internet companies? Huge corporations have it on lock down. You cannot start an internet providing company because the huge corporations will implement policies and prices that undercut the small guy and the corporations can sustain those losses for a time until the small startup bows out because they cannot compete. Then the internet company goes right back to gouging you once your area is free from competition. I'd like to see come controls there that fostered competition, but some services just can't be controlled like that. But tangible goods like knives can be and it benefits us all in the long run.

 

[HappyDaddy]

There are anti-dumping laws that protect the economy. It keeps China or whoever from manufacturing and selling products in the US at a loss just long enough to destroy their competitors. Once their competitors go out of business, the foreign manufacturer is free to set whatever price they want.

Look at solar panels. They're a wildly popular product. China was manufacturing them and shipping them to the US and selling them at a huge loss which was putting all other solar panel manufacturers out of business. The government of China was subsidizing this practice in order to boost their own economy at the cost of everyone else's. Once all of their competitors who do not receive government subsidies go out of business, the Chinese businesses, and the Chinese government, are free to charge everyone in the world whatever they want for a wildly popular and oftentimes necessary product.

So trump instituted high tariffs on solar panels from china and ordered massive penalties against the companies dumping solar panels on the American market to protect Americans from the predatory Chinese government and companies. Short sighted consumers balk and whine and complain about higher prices because they don't see how business works. They want the lowest price possible even if it wrecks the economy. They're hurting their kids and grandkids by being selfish and stupid.

So controls are put into place to protect the health of the system. If the controls can be implemented by private individuals, so much the better because individuals almost operate more efficiently than the government.

But you always have the short sighted people complaining about prices. But if given their way then the system collapses into a monopolistic oligarchy where people have no other option than to deal with people who can and will gouge them.

If you question it just look at your electric bill. Do you have one option or several? If you have one option and one option only, i guarantee the price you pay for electricity is higher than people in a different area who can choose between providers.

What about startup internet companies? Huge corporations have it on lock down. You cannot start an internet providing company because the huge corporations will implement policies and prices that undercut the small guy and the corporations can sustain those losses for a time until the small startup bows out because they cannot compete. Then the internet company goes right back to gouging you once your area is free from competition. I'd like to see come controls there that fostered competition, but some services just can't be controlled like that. But tangible goods like knives can be and it benefits us all in the long run.

For the first time (IMO) you were making rational and cogent comments. Couldn’t stand prosperity, as it were. (Pro tip: When long-time members offer posting advice/warnings, it’s almost always a good idea to pay attention).

 

[Steely_Gunz]

I've told this story before, but it explains why as a small non-knife business I appreciate MAP in some instances and why it ultimately benefits my customers, and of course, my business.

So I'm a pool guy. It's no secret that big box stores have made competing in the chemical market pretty much impossible unless I offer what I hope to be exceptional service and expertise.
To further compound this, hard goods like pumps, filters, parts, etc are all available for sale lower online that I can buy them from distribution. Why do I go through distribution? Well, I dont have 1 million dollars sitting around for purchasing. Distribution are basically banks holding credit for small businesses these days. I call it it the Wimpy (from Popeye) way of product procurement. I'll gladly pay you on Tuesday for a pool pump today...or more likely net 30.

OK so to my point on MAP. The internet is a messy free for all. It just is. It is highly unregulated. There are multiple ways to work around pretty much any standard traditional business practice. When you are just reaping the benefits of price, it's really easy to fly that Free Market flag. When you dont have to worry about overhead, building insurance, building maintenance, fair employee wages, and you dont have the absolutely irritating audacity to want to go home with a small piece of profit for yourself...well then, foam about the mouth about MAP, I guess. Here's how it helps me, help YOU.

So, you can buy a particular pump online, well below what I can purchase it for. Companies use it as a loss leader. The manufacturer likes that they are selling product, sure. However it also devalues the PERCEIVED quality if it keeps getting driven into the dirt. They are expected to be cheap now even if they are more expensive to manufacture. It also alienates the brick and mortar store because they cant compete against a loss leader. It really pisses off distribution who buy the bulk of their product to resell to the brick and mortar. So the low hanging internet fruit isn't that sweet...well except for the end user. Ridiculous pricing for incredible product? Hell yeah! The little guy and the middle man who drive and stabilize the market? Screw those guys. Free market...FREE MARKET!!

Enter MAP. A particular manufacturer offers at least a partial line of their highest quality product with an internet protected MAP. I hypothetically buy something for $220. Amazon/Large Online Retailer probably gets it for, I dunno $195. We both have to ADVERTISE, not sell, it at $325. So I have the potential to make $105 dollars. Big box can make $130. Fair enough for me.

What this does is get people in my store instead of just buying online. I can help educate them on product, explain the warranty to them and why as an authorized dealer i can give them both a parts and labor because of my relationship with distribution, let them know that I have parts available, and offer to file the utility company's paperwork for an energy efficiency rebate.

So because the playing field was at least competitive, I can offer my customer a better product with more fringe services that saves them even more money. But remember, this isn't some handout. I gotta work for their business. I have to know my stuff, answer their questions, offer the above-and-beyond. On top of that, I am totally allowed to sell my MAP product at whatever I choose. Higher, lower, at a loss, whatever. It's just a tool that protects product integrity and, to be a bit hippy dippy, cultivates a relationship between customer and business owner that isn't as common anymore.

MAP isn't this be all boogie man. Like others have said, wages, materials, tariffs, etc. You all pay for those in what you buy. If you dont believe that and tell me you have a business degree I'm going to give you a bit of side eye.

MAP inspired me to try out ZT. If I could buy a ZT online cheaper than at a brick and mortar, I probably would not have bought one. The online price would have been too tempting over the brick and mortar pricing but I dont spend more than $100 on a knife without handling it first. My local hunting shop carries them. I held it, I flipped it, I loved it. $249 there or $249 on Amazon. I got to help out a local business and have been back about 8 times for a ZT since and purchase all my guns/ammo from them.

MAP is a tool. It's not great but it's not evil. For those crying bloody murder, just remember there is someone out there than can do what you do for less. Got a raise this year? Why? You got along fine with what you were making. Might need to do some shopping around to keep the costs down. It's a free market, ya know.