Bet you only ever hear this when consumers are talking about the price gap between Canadian products and US products at retail….
I see our esteemed Finance Minister is weighing in on this subject now as well….read about it here.
Yes there are the differences in duty, economies of scale, transportation and costs of sales. BUT there is one little phrase regarding US products that most Canadians don’t know about….
MAP (Minimum Advertised Price) pricing. When I work with a retailer in Canada, we work on a minimum 50 margin for the retailer (for those of you not in the biz – 50 margin is basically taking the wholesale price of a product and doubling it to get the suggested retail.
When working with US retailers, we start at 50 percent margin as well - BUT they also have a little thing called MAP pricing which is what they are allowed to sell product for…usually about 10 to 15 percent below suggested retail – meaning they take a shorter margin. We are not allowed to do this in Canada – we can set only one retail and we naturally choose the highest.
I can understand the average consumer not knowing this little trick. When I get retailers asking me to price match to similar product in the US – I always reply that I can do this IF they are also willing to match the lesser margin their US counterparts take…….
Do you think Mr. Flaherty knows about the intricacies of US pricing? Or is he just saying what we Canadians want to hear???
