Is MRP an ethical practice by companies?

Maximum Retail Price (MRP) is the ultimate and final price charged by seller or retailer to end consumer. Under the Weights and Measures (Packaged Commodities) Rules, all packed goods should carry certain essential information on the contents of the package, such as its weight or volume, the name and address of the manufacturer, the date of manufacture, and in case of food packages, the best before the date and, of course, the maximum retail price (MRP). Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006,

We can find all the above-said details mostly on pack back. Of course, it was mandatory, yet some food packings, clothes and other commodities don’t have enough info of that kind. Surprisingly, some sellers sell products below and above the MRP as well. We tend to reject the product sold above MRP. Quite a contrast, when we purchase below MRP which gives a sort of self-satisfaction. Have you ever thought if selling under MRP would incur a loss to the seller? That,s aside, Do you wonder how online Ecom website offer such huge discounts on products well below the MRP?

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Let’s understand the concept of MRP a little. Maximum Retail price, the name itself says the price to be max. and can’t be more than that to any product as specified on the package to end consumer. Of Course selling above MRP is illegal in India. For instance, consider a product say soap and its MRP is 58 rs (as mentioned on the package). No product comes to you directly from the dispatch unit. In between, there is some ‘n’ number of dealers & retailers/sellers. All those dealers and retailers should make some profit in that 58rs soap. MRP indicates that the soap should cost you the same irrespective of ‘n’ dealers & retailers/sellers.

Now think about Ecom websites and showrooms/supermarkets selling well below the MRP! A few days back, I purchased a Boat USB cable ( ) for just 99 rs on amazon with free delivery. The MRP mentioned is 799. Heavy discount right! The same trend follows with higher price products. But how could they offer such a heavy discount on MRP? Have you ever doubted if it is real MRP? Absolutely NO. It’s not the real MRP. However, other factors influence the price like state tax system etc. Further, some part of discounts is funded by Ecom websites only.

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It is to be noted that the production cost of any product will be some 60%(approx) of MRP only. The price you see on the package is masked MRP(overestimated) to benefit the in between retailers and sellers to market & sell the product. In the case of online Ecom, there will be lesser such retailers and less logistic cost. They do place orders directly with the manufacturer or respective marketing team on a heavy scale. Since there are no intermediate retailers, they were able to offer the discount as what the retailers retain with them within MRP. In fact, the products that are displayed in showrooms are purchased at 50% discount sometimes at production cost only.

So the question is why such unreal MRP? Is it ethical on companies to overestimate MRP? On an average MRP is overestimated about 10-20% and even more based on the product type. At villages or too small shopkeepers, the concept of MRP is not much beneficial because of additional transportation charges. Still, they bound to sell within MRP only. But to a chain of retailers, showrooms the concept MRP is profit basket. Most people don’t know if product worth MRP which are assigned by them. For instance clothes, laptops, TVs, electronics store offering discounted price on MRP. The consumers are convinced that the product worth MRP while the store is offering a discounted price. So why the discounted price could not be the MRP? May be here comes the concept of consumer behaviour. Only India uses the concept of MRP that many companies take advantages to maximise their profit and drain consumer pocket.

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