Everything you ever wanted to know about RRP | eCommerce Matters Ep. 048
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Episode 48 of the eCommerce Matter's Podcast is now available, entitled ‘Everything you ever wanted to know about RRP’.
In this episode, discover the meaning and significance of RRP price (Recommended Retail Price) and gain insights into its role in pricing strategies.
We'll cover:
What is a Recommended Retail Price (RRP)?
What is the difference between RRP and MRP?
Why is the RRP important to know?
How is the RRP price used?
The rules for RRP pricing
Will there be a time to go below the RRP?
Will there be a time to go above the RRP?
Should you use it in your pricing strategy?
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Full Transcript
Introduction
Philip Huthwaite: Welcome to E-Commerce Matters. E-Commerce Matters is the UK's leading e-commerce pricing podcast brought to you by BlackCurve.
Each episode explores how retailers can better understand competitor pricing and use pricing insights to improve online visibility and checkout conversion. This is episode 48 entitled: ‘Everything You Ever Wanted to Know about RRP’.
That's Retail Recommended Price. I'm Philip Huthwaite, Founder, and CEO at BlackCurve. I'm joined as ever by Dr. Rob Horton, Chief Product Officer at BlackCurve. Let's get pricing!
Now, RRP Rob, welcome, is a very sexy topic. I'm sure you would agree.
Rob Horton: Yep. Yeah.
Philip Huthwaite: Yeah, the excitement, I can hear the excitement! Now, it's often ignored by retailers, so listeners stick with us. It's often ignored by retailers. And a lot of the time we are focused on, oh, what's our competitive strategy?
Or we get absorbed by tactical pricing. And we get absorbed by what psychological pricing techniques can I adopt? And, even more recently we've done podcasts and blog posts around price elasticity. Now, you forgive me and I'm not putting words into your mouths, Rob or listeners.
But RRP is not often, a topic that takes up a lot of our energy and mind when we're talking about pricing because it sometimes can be considered one of those, fairly mundane price points. That is almost, oh goodness me, we've been given this by the supplier but by and large, I'm going to go and do my own thing.
Really what I wanted for the topic today was just to just reconfirm what the retail recommended price is and just convey that it does actually have a role in a retailer's pricing strategy. Knowing some of the rules and the legalities around how you should and shouldn't use RRP in your promotional pricing strategy I think will be really beneficial to the listeners.
So, I hope you are more excited, Rob than you were when I shared the topic before.
Rob Horton: I spend a lot of my time working with RRP because it is the foundation. I, we will get into this later, but it's the kind of questions like, what do I do?
How do I price a product, right? If I've got no information, what do I use? What should my baseline be? Where should I start for the new product? All of those kinds of questions are underpinned by RRP. So, it is super useful and super important.
Philip Huthwaite: Fantastic. So, in terms of today, we're going to…
Discover the meaning and significance of retail recommended price, and then we're going to convey how it can be used, or the role of it in an e-commerce company's pricing strategy. So, with that, let's “start at the very beginning”. Who, where was that start at the very beginning? Was that a sound of music quote or have I lost you?
Rob Horton: I have no idea, mate, but I'm guessing it is kids related. If you know it, and I don't,
Philip Huthwaite: I'm pretty sure it's the sound of music but anyway. It’s quite old school and you should know that reference but I'll let you off.
Rob Horton: I don't think that's the sound of music. How about listeners’ comment, who's right?!
What is a Retail Recommend Price (RRP)?
Philip Huthwaite: So, what is a retail recommended price or RRP for short?
Rob Horton: It's quite straightforward. At least the definition is, anyway, it's the price set by the supplier as a recommendation to the retailer.
It's just what it sounds like a recommendation. People often try and enforce it, but I don't think that's legal. Is it really?
Philip Huthwaite: It's price fixing? No, you cannot, categorically, certainly in UK law, enforce a retail recommended price. It is just what it says on the tin, a recommendation.
We often hear, anecdotally, and we'll maybe touch upon this later, of e-commerce companies, our customers are saying, I've got to price this at the retail recommended price because the supplier will withdraw the supply of products to me. But the supplier is absolutely acting against the law here.
The supplier can't do that. And we'll touch upon that in a bit more detail later, but it is a recommendation that's all it is.
Rob Horton: That is the key difference from the kind of American equivalent in terms of like map pricing or minimum advertised pricing.
Because that is legally enforceable, isn't it? Whereas our RRP isn't.
Philip Huthwaite: Yeah that's exactly right. So, in the US they have something which is called map pricing or minimum advertising price, which is basically them saying, you cannot go below this price. It's the minimum price that you can advertise or sell this product at now. That is legal because it falls under their Federal Antitrust Laws. And obviously, there are different policies for different states, and I'm not a solicitor, so I don't want to get myself too tied up in knots. But essentially, that is legally enforceable by the suppliers in the US, that if you sell below what they're telling you is the minimum advertising price, you can be sued, you can be told off, and they can withdraw products from you. Whereas in the UK and actually in the EU, you can't do that. There's no such thing as a recommendation.
Rob Horton: So, I guess to illustrate the difference between those, how you'd use those two different data points in BlackCurve: A map price would effectively form your minimum price. We'd put it in as a safeguard.
So, you'd be saying, alright, whenever I'm using automatic rules or whatever, this price cannot go below this price. Whereas we'd use an RRP more as a starting price and say, okay, start my price at RRP, and then go and see if I find any competitors, but it provides more of a starting point and the other one provides a finishing point.
Philip Huthwaite: Yeah that's right. And as in the US, that finishing point is gospel because that's legally enforceable. Whereas retailers we work with will typically set that minimum price. As their own calculation, their own safeguard because they want to protect their margin.
They can go below that price because they can do, effectively whatever they want. Within the constraints of obviously competition law and will go into that in a bit more detail. But, just to hammer home, in the UK and in the EU having a minimum price, would be an infringement on competition law.
I hope I'm not opening too much of a can of worms and I suggest we probably don't go too much into it, but you do think, with the USA being the land of the free and equivalent, they would probably thrive on a capitalist tendency to give retailers more free rein on their pricing.
Whereas there seems to be lots of rule enforcement in the US.
Rob Horton: I could blow your ear off about that!
Philip Huthwaite: we'll save that for episode 49 shall we?! So, I think we've covered what is the retail recommended price?
What is the difference between RRP and MRP?
Just to confirm it is simply a recommendation from the supplier. And sometimes we get asked what is the difference between a retail recommended price and a manufactured recommended price? And just to confirm, they're exactly the same thing. They're used interchangeably.
The manufacturer has no legal power to enforce this recommendation. And certainly, in the UK that comes under the Competition Act of 1998. Don't bow down to pressure from your supplier. You've got to stand up to them and we'll go into that in a bit more detail.
Why is RRP Important to Know?
Why is the retail recommended price important to know? Why do you recommend Rob, that retailers take note of RRP and have it in their dataset?
Rob Horton: Yeah, sure. So, it's a starting point for the price to let suppliers try and standardise the launch price across the board. Suppliers not wanting to get their products priced wildly differently from store to store.
So, say I've got a shop, you've got a shop, you are selling at let's say RRP, and I'm selling half of RRP because no one's told us otherwise. Customers are going to get upset, the supplier, they're going to get upset, etc.
So that's important because it can impact brand damage, and then also if you get into the more luxury goods space it's important for a brand and reputation oh, not just say luxury, but I guess across the board if you want. This is a premium product, right? So, we recommend you sell it at this because you should be positioning this product as more expensive than this other product usually because the cost base is high because it's higher quality, it's more reliable, etc.
So really what it does is it just allows the market to have a starting point and it allows supplies to standardise pricing to some degree across them.
Philip Huthwaite: Yeah, I think that's hit the nail on the head and let's be honest, a retailer has got, it's common for retailers to have thousands and thousands of products in their inventory, right?
They're not going to know every single product intimately. Although, I have to say, having conversations with a lot of retailers, their ability to remember product codes and price history and who different competitors are, and all the information about it always astounds me. So, I'm always very impressed by that.
But if you are regularly launching products, just having to go through the exercise of, oh, I've just got this new Dyson, I'm stealing your examples now, aren't I, Rob, I've got this new Dyson that's just come out like, oh it's a DX7 Animal Hoover. Oh, goodness me. What do I price it at?
Okay, I bought it at this. Okay, I want to make a 30% margin. Let's go with that.
Rob Horton: I almost corrected you on the SKU code.
Philip Huthwaite: I did make that one up, so don't worry.
Oh, dear. We're so cool, aren't we? We know the codes for Dyson Hoovers. But what I'm trying to say is that it just takes that initial pain and that initial thought process away and does offer that guide that starting point for the retailers. So, it means that at launch, not only does the supplier know that there's going to be some consistency for their own products, which gives them that brand protection.
Because hopefully a lot of retailers at launch, whilst they can't enforce it, typically, when new products are launched, they do, they generally start around the retail recommended price. And it also takes away the thought process, that extra decision that the retailer has to do at launch.
And also, I've mentioned that use case of, oh, we need to make a 30% margin, right? Sometimes, especially new products. In the last podcast, we mentioned the Apple headset and the VR headset. Typically, the suppliers have spent lots and lots of money doing market research and understanding the true value of their own products in the marketplace.
And therefore, if you use the retail recommended price, especially on launch, it's likely that you would achieve a lot higher price than simply applying an arbitrary 30% markup on what you’ve bought it at. So, you've, by using the retail recommended price, you've unlocked value-based pricing without you even knowing about it. So, it means that you can typically extract a greater revenue and therefore achieve a higher profit margin on the sale of those products? Certainly initially. Yeah.
Rob Horton: I think that point's really important, right? Especially with new products, because often there's a lot of excitement around them for whatever reason.
So, you should be able to maintain a higher price point than you would otherwise. The true. Kind of market-driven price. Six months a year down the line might be a lot lower, but at least starting at RRP, which can often be around a hundred percent markup, I think means that in that initial period, you just harvest a lot more margin than you would otherwise.
So that's great.
Philip Huthwaite: Yeah, I absolutely agree with that, Rob. And we've mentioned that RRP is typically used on the first launch. And then what we haven't actually teased out, and we will go onto this in a bit more detail around the rules of RRP pricing is that retailers use it to then start to demonstrate discounts against a previous price or a recommended price.
And this is used generally to encourage sales because… everybody likes a promotion. Everyone likes a discount, right? I'm sure there are some people out there that don't. But I'm sure I'm speaking for the majority of people that are listening.
Do Retailers have to sell at RRP?
And so, I guess just to confirm, because I think this is an important point. Do retailers have to sell at RRP? And we've mentioned that it's a recommendation, and we've mentioned instances whereby suppliers have told us that we need to update a pricing rule because their supplier has threatened to withdraw the supply of products unless they advertise at a certain price.
Now, that is absolutely illegal. So, they cannot do that. And I know that there are relationships, and I know that there's certainly a reliance on suppliers, especially if they're a major source of your revenue. And it's going to be quite difficult. To almost dob on them to the Competition and Markets Authority.
But I would encourage you to, if in that instance, in the first instance, communicate back to them that the practice is illegal. Are they aware of that fact? Because sometimes it can be junior members of staff that are flying by the seat of their pants and maybe doing things that that they didn't know was an illegal practice.
So, I'd always encourage sort of a frank, friendly, open conversation just to make them aware of that. And then typically, again, anecdotally this is told to them verbally, so it is not always easy to document.
But typically, these days conversations are done over Zoom. And typically, these days, goodness me, a lot of retailers don't sometimes even talk to their suppliers. It's all done over email. And so, if this becomes a big issue, don't be afraid to take a record.
I hope I'm not getting myself into too much hot water here but don't be afraid to take a copy of it. Take a snapshot of it and go and seek some legal advice from your solicitor.
Rob Horton: I think this a really hard one though. Sure, if you are big enough to weather that storm.
But it's really hard, right?
Philip Huthwaite: It's a David and Goliath-type piece. Yeah.
But you'd be surprised at the forums that even the smaller retailers are involved in, typically they might be involved in buying groups or, you attend events and you start to talk and you can start to build up a picture. Are you being forced to do this?
Rob Horton: Anecdotally, from my experience, the suppliers are less doing this from a form of price fixing, but more doing it if someone's pricing has gone quite wrong.
Philip Huthwaite:. Yeah. From a brand protection perspective. Yeah, exactly.
Just always make sure that you seek legal advice and go through the steps.
Don't just assume, oh, they're a big supplier I'm not going to bother. Always seek appropriate advice in this instance because it is illegal to be told that you shouldn't advertise at x price, sorry, you have to advertise at the retail recommended price in the UK. So, do go and speak to a solicitor, and then they can advise you on your options.
I'm always standing up for the little person and maybe I love too much of a fight, so that's maybe why I might be a bit biased but just to reiterate, if you haven't got it already, it is illegal to enforce a retail recommended price.
Rob Horton: I just think I'm more used to seeing people's pricing algorithms go wrong.
Philip Huthwaite: That's true.
Rob Horton: Maybe that's the case or someone fat thumbing. Not us. But maybe, I think I told the Argos story on a different podcast, I'll say Argos because they’re big enough. They can take it, but someone clearly fat fingered a spreadsheet and the whole market was just following it up and down and up and down and up and down for a short period of time, with some crazy prices.
Philip Huthwaite: I think at that point, if I was a supplier, I'd be going in saying, “Guys, what’s going on?”. I think in that instance, the supplier probably does have the right to pick up the phone and go, “Hang on a minute guys. You do realise that you're massively undercutting the RRP price?” or, “Hang on guys, do you realise that you're massively over the RRP price?”
The Rules of RRP Pricing
I think it's probably worth going into looking at some of the rules around RRP pricing. When I mention RRP pricing, it's more about how it's used in a promotional context. Sometimes you'll see companies offering a huge discount from a retail recommended price. Now this is called comparative pricing. And things like retail recommended price, 300 pounds down to a hundred pounds online, or, I don’t know, originally 500 pounds now 250 pounds. Right? And this is called comparative pricing. And another term for it might be your price anchoring. You could consider this also psychological pricing because you're trying to tap into the consumer’s desire for a bargain and tap into those consumers that wouldn't have purchased that product at the higher price. And are therefore going to, or almost they were interested, but it was too expensive. And you're now encouraging them to make that purchase now.
Rob Horton: Yeah. It's classic anchoring, isn't it? Thinking about it. It's the true value of this is, X or 500 say, but we are going to give it to, you'd stay for 250. So, you're like, “Oh wow. I'm getting a serious amount of value for the discount here”. And that's used not just in e-commerce, but I was looking at a post on it today in terms of how to get people to buy your apps.
It really works. So, from a retailer's perspective, if you're doing that within the bounds of the law, it's a really powerful thing to do.
Philip Huthwaite: Now that is absolutely not illegal. You are absolutely, legally allowed to show a discount from the retail recommended price.
But the key is that you can't be misleading. Because otherwise, you'll not only be in trouble from, the competition. Are they marketing, competition bureau or agency, or whatever they've been rebranded as these days? But also, likely the advertising standard agency, the ASA is probably going to come knocking on your door if it's misleading.
Rob Horton: Or even worse nowadays, which.com. Yes. I'm looking at you. Tesco Club Card.
Philip Huthwaite: Yes, very much yeah, I love that article actually. Let's not show the price per a hundred grams or something on the Tesco Club Discount tickets.
So, you felt like you were getting a discount, but it was actually cheaper to buy the bigger version.
Rob Horton: I will say probably only if you want the larger bottles of ketchup.
Philip Huthwaite: It wouldn't fit in most people's cupboards to be fair, that's part of the problem.
Rob Horton: It's oh yeah, I can get 10 litres from Costco.
Philip Huthwaite: I almost want to see you pick up 10 litres. I don’t know if they sell it in 10 litres, but pick up a 10-litre bottle of ketchup and try and put it on your chips!
Rob Horton: The amount we get through ketchup and mayo in this house, it would be a sensible purchase.
Philip Huthwaite: So, to come back on track though, I think without us going too much into our ketchup stories, what I mean by misleading is, you can't just for 10 minutes, advertise for 500 pounds and then immediately put the price down to 250 pounds.
Okay. There used to be, I can't remember the exact year, but there used to be a law that you had to advertise a price for 28 days. And then you could advertise a discount, whereas actually, they've stopped that law. It was deemed to have too many loopholes in it and people were taking too much advantage.
Yeah. That's it. We're absolutely not mentioning DFS here.
Rob Horton: I was trying not to. Other sofa retailers were guilty as well.
The great thing about DFS is that I think they're the only sofa retailer that is still around probably because they've done such a good discounting strategy.
Philip Huthwaite: Yeah. They just had one sofa, didn't they? In one of their stores for 30 days. And then it meant that they could advertise that sofa as a discount from it.
Rob Horton: Allegedly.
Philip Huthwaite: Allegedly, yes. Thank you for saving me there, allegedly.
But really the law is around just making sure that it's been advertised at that price for the equivalent period of time. If you are going to advertise it as a discount for 30 days. You've got to make sure that it's appeared at, let's take the example. If you're going to advertise it 50% off, 250 quid, for 30 days, you've got to make sure that it's been at 500 pounds for 30 days as well.
And then that means that if you are doing, more of a high-low strategy. So, you're having it one month high, one month down, one month high, one month down. You can do that. That's not a problem. But you've just got to make sure that you are doing it for the equivalent period of time.
But now you can't artificially inflate prices as well. So, you can't just, and I guess it's the same sort of thing. You can't just suddenly put a price at a slightly higher for two days and then discount it again. That's an absolute no-no. There were a few instances of this happening.
You've got the likes of Carpet Right? And Simba Sleep. If you want to look up the papers. The Simba one was in 2022.
Rob Horton: But all that aside, I would say those mattresses that arrive in the post are of amazing value.
Philip Huthwaite: I still don’t know how they fold them up.
Rob Horton: I’ll send you a video. I got one. They're flatpack, so there's no air in it. And then you basically, you open it up and try not to slash the mattress when you're doing it, and then you just leave it, and its foam, it expands.
We got a Casper one before they stopped selling them in the UK, but it's probably my favourite thing I own. It's so good.
Philip Huthwaite: Oh, I look forward to next week when I'm in the office. You can show me that video. Definitely.
Rob Horton: You'll have to come to a Greek island next week, mate.
Philip Huthwaite: Just me. Yeah, I'll happily put that on expenses.
Really it is just making sure that you are being open and honest about your discounts.
So, if you're using RRP as the discount, make sure that you say RRP against it and show that it's 50% off. We often see retailers that explicitly go into a bit more detail than that because they don't want to become unstuck. So, they might put in the dates, the RRP was listed. Okay.
And that, we do actually encourage you to do that because the more information you're giving to the consumer for them to determine, hang on a minute, is this a real discount from retail recommended price or is this some artificially random made-up RRP or made up starting price the better.
And also, it means that you are unlikely to be told off by the ASA because the more information you can give to the consumer the better. If you've been in the tube, the underground, or a bus, and you've seen things that are advertised as discounts, try and read the small print and you'll generally see things around dates and when they were listed. So that's what we mean by giving the consumer enough information as possible to make sure that they can decide whether or not it's a true discount. And that's really it. That if you make sure you give people the right information, you're not going to fall foul.
You're not going to get in trouble.
Rob Horton: We probably don't want to open this can of worms because I don't know enough, but if I'm brutally honest, so it's a really interesting one when you get into, because obviously RRP is just that it's a recommended retail price.
It's not the true market price. And so, if you're displaying RRP whilst it's having a different price, is that problematic?
You only really get into trouble when you, say for example, when you're doing kind of pretty misleading pricing strategies or discounting strategy or advertising strategies really, rather than just setting a true price in the market and selling
Philip Huthwaite: Yeah, just to give some examples.
So, say if the RRP was 150 pounds and you first then advertised it as a discount after say, I don’t know, 30 days that it's 75 pounds and you said it was 50% off RRP. And then later on you then decided to advertise it for 99 pounds. You can't then say, oh it's a discount off RRP because that wasn't the last price that it was set at.
And so that's what we mean that you can't just use data points that happened a long time ago. It's got to be. A current snapshot in time, and that’s why the length of time it's been at versus the length of time that you've recorded the discount is probably quite a useful benchmark.
And therefore, when you're looking at your promotions, probably erring on the side of caution I'd make sure that you only really consider price points within the last sort of 60 days or so, just to make sure that you're not going to come unstuck.
And by and large, we'll go into this in a bit more detail in a moment, but by and large retailers that are following a competitive pricing strategy, you're going to be changing prices all the time. And so, therefore, RRP in that instance is typically only useful on kind of day one, so to speak.
No, I've forgotten a few points, haven't I? We’ll come on this!
Does the RRP price include VAT?
The retail recommended price is the advertised price. And we have to pay value and value-added tax. You've got to give the tax man his cut.
Will there be a time to go below RRP?
I've already mentioned this, if you're running a competitive pricing strategy, yes you are.
You are very much likely to spend most of your time below RRP because you know you are competing with other retailers. Other retailers are trying to get market share. And one of the ways they get market share is by lowering the price to encourage sales. And so, if you're following competitors and you're using that as the primary data point for your pricing strategy, you're likely to go under RRP.
I tripped myself up on it a few moments ago. Your RRP is really useful in a competitive strategy because there will be times when your competitors go out of stock, right? And if you don't have RRP as that data point, your competitors might go out of stock and you are then stuck at the last price that you had when you matched that last competitor that was against your pricing strategy, and therefore you are going to keep selling at that price.
Whereas if you add this pricing rule which says if there are no competitors, let's snap back to reach our recommended price. You've got the opportunity there to sell the same amount of volume, or if it's an in-demand product, and you are the only one who's got it, your volume might increase, but you will sell it at a higher price, and therefore achieve a higher margin in every single sale.
Will there be a time to go above RRP?
So that's where it does become really useful for even retailers that are running a competitive pricing strategy. And will there be a time to go above RRP Rob?
Rob Horton: Yeah, for sure. The laws of supply and demand still hold, right? It's completely legal to charge more for a product.
Really good examples of this are limited runs. So, if you are in the fashion game like a sneaker drop or something, right? They might initially RRP for $200, but could then be $2000 in fairly short order down the line just because they're a fashion item and they're high in demand.
And that's fine. That's a market, right? So yeah,
Philip Huthwaite: Yeah. The retailer can do effectively what they want with that price. But there's certainly, if it's a well-advertised product that is internationally recognised, and is available in lots of places, it's likely that the RRP price will be listed in multiple locations and therefore if you have lots of your products and you are selling them above RRP and it's obvious because shoppers are shopping round, it only takes a couple of screenshots and a social media wave and, you can cause quite a lot of brand damage in this particular instance.
Rob Horton: I think I even have a simpler view than that, to be honest, in this day and age. People just won't buy from you. Yeah. If you're not price competitive. But you can, there are like definite strategic reasons for doing things like that. Usually at the individual product level rather than across your entire product mix, like you were saying.
But, you might think, there's limited stock on this, and I just want to, I'll let everyone else sell out cheaper, and then I'll sell in a bit later. So, pushing your price up to slow the demand for a bit letting people drop out of the market, and then claiming a bit more margin later on is an absolutely fine and legitimate pricing strategy.
Should Retail Recommend Price be Used as Part of a Pricing Strategy?
Philip Huthwaite: So, with that, should retail recommended price be used as part of a pricing strategy? I've already mentioned this, in the absence of competitor data, yes, which I think is probably for our listeners is the most common reason.
Rob Horton: I think that's the real key one for us.
So, for people, I think I'll just stick in our space. To be honest, because it's a pretty broad church, but for people in e-commerce largely selling branded goods it's a really important foundational pricing rule because it basically, you use it to answer the question, what should the starting price of this product be?
No other information about the market, no competitor prices, no sales, no nothing. Starting at RRP or a little bit above or below RRP, depending on how you want to position your brand. Obviously, most people go a little bit below. It is a really good starting point and you have that as your base rule.
And the reason why I picked you up on this earlier, but the reason why it's important to have it all the time is, to act as that snapback, like you said, so if competitors drop out of the market, suddenly you're the only people selling it. If you're selling it for cheaper why not go back up to RRP, right?
Bring that price back up and then take sales there because all of a sudden, you've got no one to compete with you. So, in terms of your everyday pricing strategy, pricing rules. What you're saying is effectively, if there is no other data in the marketplace base my price off RRP, and that's why it's super important and underpins well, everything we do really.
Philip Huthwaite: Just to keep that example going, you mentioned Argos earlier where, there were a couple of days where the market went a bit bonkers with everyone following Argos up, and then everyone was following Argos down and, it was almost a bit of a seesaw.
Now if you are running a competitive strategy where that happens and you are just saying I'm going to arbitrarily match Argos. And you've set your minimum price, so it means that you're not going to go below a certain price. So happy days, I've protected my margin and you haven't got that upper ceiling.
You are going to follow them and you are going to have stupid prices on your website because of somebody else's mistake, okay? And you don't want that to happen. So, RRP can be used as that price ceiling. We’ve done a podcast around pricing mistakes and I think there was on Amazon, there was a book that should have been sold at nine pounds. And because two retailers were in their marketplace, were chasing each other. The book suddenly went to 2000 pounds, or something ridiculous, right? Because they were chasing each other up and up because of an algorithm problem.
So, having this price corridor of not only a minimum price but including RRP will protect you in that instance. So, it should absolutely be used in your arsenal. In this particular instance, it has been used in your pricing strategy as a safeguard. Again, if you're following that competitive pricing strategy.
How does BlackCurve help retailers use RRP?
To end, how does BlackCurve help retailers use retail recommended prices as part of their pricing strategy?
Rob Horton: So, a couple of ways. The first one we've mentioned is about using the pricing rules. When you set the rules up we use it to do things like set a price ceiling to ensure you don't go too high with your prices.
Use it to price products when you don't have any data, all that good stuff. And the other way we provide it is in our reports and analytics as a comparison. So, for example, when we make a price recommendation, you can view that price against your current price, and you can also view it against RRP.
So really, it's for me, one of the key foundational data points that underpins all your pricing strategy and insights and analytics within BlackCurve.
Summary
Philip Huthwaite: So, in summary, whilst on the surface, RRP and retail recommended price can be seen as maybe one of the least sexy parts of pricing.
I hope that you've taken away from this RRP podcast, the fact that it is a very important data point and it should be used and not forgotten about because if it's forgotten about, you've opened yourself up to instances of difficulty, whether it be from a promotional perspective of advertising promotions incorrectly and falling foul of the competition authority and the advertising standards authority.
But actually, I think the main one is around making sure that where you are running a competitive pricing strategy, it gives you that ceiling in your pricing rules if, especially if you're using automated pricing, to make sure that you're not going to wake up and have priced your product completely stupidly because you are following a competitor who's made their own mistake with their data.
The last thing I'll just reiterate because I've mentioned it enough times already, so I think it's worth that I summarise it, is that it is a recommendation. Okay. It is a recommendation. It's not legally enforceable by your supplier. So, it is a recommendation if I've not said that already.
So, treat it as such. And if you do feel that suppliers are putting pressure on you to use it, please do go and seek the appropriate advice from legal professionals in the instance, because certainly under UK law, it's a big no-no for suppliers to force you to have a particular price point.
So, with that, it's incredibly useful. Go out there. If you've not got it in your data set, add it to your data set. And if you're not using it in your pricing strategy. Add that price ceiling in your pricing rules as well. Because that will protect your brand because you don't want to wake up with a stupid price, do you?
Because that's not a good day in the office.
So, with that... we've been BlackCurve. This has been E-commerce Matters, the UK's leading e-commerce pricing podcast.
Until next time, happy pricing.