Jumping into the world of sales can be immensely rewarding. And most people doing so are well aware of the fact that they'll be facing some challenges along the way. But what people tend to forget is that there's a lot happening behind closed doors. The world of buying and selling might seem simple, if not easy, at first. But the economics of performing this function can be more complicated than one would think. And one of the least talked about aspects of this process, minimum advertised pricing, is a key factor in this complexity.
Explaining Minimum Advertised Pricing in Simple Terms
One often finds technical language to be inherently confusing, intricate, and complicated. And on the opposite end, it's so common that most people assume that technical language which seems rather simple and upfront must hide a hidden complexity. But is that really the case with minimum advertised pricing? The definition of minimum advertised pricing and its intended effects actually are actually fairly simple.
In common language, minimum advertised pricing simply means the minimum price which one can advertise any given product at. This is a deal commonly negotiated for between a retailer and a distributor or manufacturer. There are quite a few reasons why companies might want to set a minimum price for which an item can be sold at. But in general, one of the most important concepts in retail is the idea of perceived value. If one sees shoes which are always sold at a price range over $200, then it's safe to assume they're higher quality than a $50 pair of shoes. As such, companies might want to ensure that nobody advertises those shoes at a lower price range.
Some Important Distinctions
The key phrase in the earlier example is “advertise.” The minimum advertised price isn't the final price point at which one can sell an item. Rather, it's the minimum price one can display in advertisements. This is the area where some hidden distinctions can be found. People often mistake the minimum advertising pricing requirement as a stipulation about pricing in general. One can sell an item which has a minimum advertised pricing requirement for whatever is desired. The only specification is that advertising can't feature a price below that minimum.
This often led people into following the letter of the law while violating the spirit. For example, imagine those same $200 shoes are going to be on sale. A store can't actually advertise them for less than $200. But what if that store created a grouping of shoes all on sale for $150? Then,the $200 dollar shoes could be on there with a label telling people to come into the store to find out what special price they have. The implication is that they're priced at $150 as well. But it's technically legal because nowhere is it actually advertised at a price below $200.
Online sales have taken this strategy to the next level with click through values. These usually have a label mentioning that they're on sale. But they'll typically have a note which tells people to add the item to their cart to find out what the actual price is. Some companies even make it easy to find the value through web scraping. Again, this comes as a technicality. If a company makes a price visible to scrapers, then they're still not actually advertising the value. A bot finding out the price hasn't even involved a single human being in the transaction.
What It All Means in Practical Terms
In practical terms, this all comes together to mean that one needs to exercise some caution with minimum advertised pricing. It's vitally important that one not actually advertise using anything below that value. However, at the same time, one can benefit from the loopholes not just as a retailer, but as a consumer.
From the perspective of a consumer, it means that one should always take note of values which are implied or suggested rather than stated. And from a retailer perspective, it means that one can do this type of hinting. And it means that one can keep prices open to scraping or perform that scraping as needed.