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Home / Money / Calculators /  DYK: difference between marketing operating price and MRP

Brick-and-mortar stores are not very happy with the attention that e-commerce websites are getting. Sales on these sites took center stage this festive season. Various reports state that a few brick-and-mortar retail stores have written to the commerce ministry regarding the deep discounts offered by e-commerce firms. It is reported that these firms have written to the ministry complaining that the e-commerce companies were selling products at steep discounts to the market operating price (MOP). Offline retailers typically give discounts of 10-15% on MOP.

Difference in price

MOP is the actual price at which a product is made available to a retailer. It is the lowest price at which a retailer can sell a product and is set by the brands or the manufacturers. It is usually at a marginal discount to the maximum retail price (MRP), and is decided by the demand and supply dynamics of a product. The MOP can be lower or the same as the MRP. Offers such as the ‘0% EMI’ are usually based on the MOP.

MRP, as the name suggests, is the maximum price at which a packaged product can be sold to the final consumer, and is usually at a mark-up of the cost of the product.

According to the Department of Consumer Affairs’ standards of weights and measures (packaged commodities) rules, 1977, “‘maximum price’ in relation to any commodity in packaged form shall include all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing forwarding and the like, as the case may be."

Selling a packaged product at a cost higher than the printed MRP is an offense.

Why the dispute

Offline retailers are accusing online stores of ‘predatory pricing’, which means setting prices very low in an attempt to get rid of competition. Since prices are fixed with a certain mark-up to the cost of a product, if e-retailers offer products at a higher discount, it affects offline stores’ margins.

Consumer takeaway

Unlike the MRP that is printed on the product, the MOP is not. If you want to find out what it is, you could ask for prices across various stores, both offline and online. This will give you a fair idea of what the MOP of the product is. For instance, let us compare the prices of an LG 32 inch high definition television (MRP of 28,900) across online and offline retailers. On Snapdeal.com, it costs 22,490; on Flipkart it is 22,990 (prices as on Monday); at a brick-and-mortar store such as Croma in Nehru Place (Delhi) it is 27,900; and at an LG Shoppe in the same locality, it is 28,900. With this you can get a fair idea of what the MOP could be, and then use it as a bargaining tool. But do remember that it is completely up to the retailer to want to sell at a price that’s lower than the MRP.

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