Why the Minimum Resale Price is the Lowest Price

If you want your out-of-state customers to be most confident that they are getting your lowest price so their shopping is easiest, you should call it a Minimum Resale Price (MRP). That’s because the law calls the lowest price that most often so using any other name makes you less responsible. Small businesses and entrepreneurs, therefore, can create a legal policy using this term saying that the prices they are selling at are their lowest. Businesses benefit from the fact that many customers are attracted to getting the lowest price and many others will buy sooner when offered it. The Minimum Resale Price was originally used by manufacturers to control the prices of their resellers but any offer can have an MRP. The U.S. Supreme Court re-calls it as that in the Leegin vs. PSKS case, using that term more than any other. The case opinion describes historic doubts about vertical price-fixing and more “innovative” methods of commerce that now make it possible, referring to the internet where profits can be lower and more competitive.

The difference between horizontal and vertical price-fixing is important to note here for those of you that might be worried about the governing rules involved. Horizontal price-fixing is the collusion of competing sellers in determining a price without the participation of the manufacturer or creator of the good or service. It is still illegal in the United States and around the world. Vertical price-fixing is the dictation of a final sale price by the manufacturer or creator of a product or service. Because of the Supreme Court’s opinion, MRP agreements are now judged on a rule of reason basis in the United States, Canada, China, and Israel. That means that as long as you don’t have a mark-up that is too high, you are not violating any anti-trust laws. Commerce within this realm must also usually be between separate states or countries since many state laws still prohibit it.

Your MRP policy can have any specifications you’d like so that the variety in your market can be met with variety in your pricing and business. These can allow for lower prices outside of your offer or can describe any other specifics or limitations that you choose to include. This might be because you have a special price for employees or are having a sale on a limited amount of your offering.

Many sellers already sell at only or mostly one price so your transition into guaranteeing that you are doing so should be fairly simple. With all of the discounts available these days, the MRP gives them a chance to prove that they’re easier for customers to buy from. Other businesses have price guarantees but by using the MRP you are most likely to have the law guarantee your price. Even if a manufacturer or a seller offers money to those that find a lower price elsewhere, if the contract makers do not call the price an MRP, it is easier for them to back out of the contract. Any brick and mortar business could have an MRP sticker that means that they’ve signed the strongest guarantee that their prices are final. It would keep customers from overpaying since one customer might get a lower bargained down price than another.

If a person finds an offering like the one that you have at a better price they cannot be sure of the bottom price for that offering and, therefore, its value. They’ll regret not buying at the lowest price. All offers have their similarities and their differences as well. You decide which offers to put MRPs on and how different they are from your other deals as well as how strongly you guarantee them (possibly backing them with cash).

Eugene Kantarovich became an expert in using price restraints to show the lowest price after graduating from Lake Forest College with a BA in Poli Sci and is the owner of Minimum Resale Price.