When establishing your brand identity, it is important to decide how you want your brand to be perceived.  One of the most effective ways to establish brand identity is by the price of your product – think Rolls Royce versus Chevy.  Is your brand a value brand, driven by price point, or, is your product a luxury brand?  There is usually a trade off.  Lower price, value brands tend to move higher quantities, but offer a lower profit margin.  Luxury brands command a higher price, and have a bigger profit margin.  But they tend to move less quantities. 

Some retailers want to move as many units as possible, and are not concerned with profit margins.  Some retailers do not want to carry a line that is discounted.  There is a place for both types of retailers.  As a brand, you will have to decide what you want to be, and with which resale channel you want your product to be carried on. 

There is another way price can affect the perception of your brand, through retail discounts.  Ecommerce was initially known as a discount channel.  That was the attraction of buying online.  Many manufacturers did not want to have their product sold online because of that.  The value proposition was, you had to wait for the product, but your reward was a lower price.  That model has become obsolete, with rapid shipping.  With everyone selling through ecommerce, price is just one consideration when choosing which ecommerce seller to buy from. 

To try and control pricing, retailers in the U.S came up with a concept called MAP.  MAP stands for Minimum Advertised Price.  Do you notice I didn’t say Minimum Selling Price?  I didn’t refer to selling price, because, in the U.S. and most countries, it is illegal to dictate the actual selling price of your product. 

In the U.S., MAP is legal, to an extent.  There are very technical aspects that make it possible to require your resellers adhere to a specified advertising price.  But, once they get to the checkout basket, they can sell the product for whatever they choose, with the exception of below their cost.  In other countries, like Europe, you cannot dictate the advertised price or the selling price. 

There are steep monetary penalties for trying to control what your product sells for.  You can even be sued by resellers who feel that you are exerting too much pressure on them to control the selling price. 

Why would a company want to control their advertised and selling price?  Because when a product is profitable for the reseller, they have an incentive to promote and carry it.  If the product is heavily discounted online, many ecommerce sites will not want to carry that product. 

One way to keep downward price pressure on your product is to limit the number of outlets that carry your product.  The fewer the places your product is carried, the better chance you have of the product becoming a Price Football and Click Bait. 

The key to staying out of legal trouble when selling through ecommerce, is knowing what the laws are in each country you sell into.  Do your research before entering a market.  Be aware of which ecommerce sites sell using discounts, before choosing a reseller.  Once your product is online and discounted, it is very difficult to get price control of your brand back.

Perry Goldstein
Perry Goldstein

Perry Goldstein is an electronics industry veteran, with over 40 years of experience in manufacturer sales and marketing in both the consumer electronics and Pro A/V spaces. He has managed sales in both B2B and B2C markets.