If you ever logged on to an online retailer website and noticed that most of the Home Theater and Televisions are placed within the same price range, you need to know about UPP. Otherwise known as the Unilateral Pricing Policy, it is a manufacturer side pricing quota that has little or no room for discounts.
I remember a few years ago when TV sets and electronics used to come with a discount percentage. Especially during Holiday season or Black Friday, such accessories would be offered via door busting deals. These days, things have changed. UPP is causing buyers to see almost the same price range on their TV sets without any major fluctuation.
They call it the “price is the price” factor. Whatever the price is decided, it will not have any discounts available for the customers. More so, it is the “new” and “legal” way of squandering people for money. Manufacturers are happy; people cannot do anything despite of their complains – and it is a win win situation for the companies.
The Unilateral Pricing Policy rolled out for TV sets initially. Later on, Sony, Sharp, LG, Bose and Samsung, liked it so much that they are now introducing it for other electronic products as well. Don’t be surprised if you see the latest Samsung TV or Samsung device with almost identical prices at various online retailer web pages.
Guys at CNET have the following views about UPP, “The 800-pound gorilla of retail, Amazon, is one of the main reasons manufacturers adopted UPP. So now Amazon and Best Buy (and other retailers) all have the same pricing.”
How UPP has become Legal all over?
UPP is legal because of how companies are associating with it. Let’s say, XYZ company opts in for UPP, it has t the right to do business with whoever they choose to. XYZ sends a memo to an online retailer, or a local vendor and says, “Okay, according to the Unilateral Pricing Policy, we have decided that our electronic from so and so category are not to be offered to your buyers under $2,000 range.”
As a result, the retailer has the option of either offering the product at the price which the company has set, or at a slightly higher price for more profit. Otherwise, the company has the right to stop shipping/ supplying their goods to the said retailer.
In theory, let’s say the retailer has a good standing in the buyer market due to its discounts. In this case, UPP will have a negative impact on the retailer’s credibility because there will be no more deals/ discounts for said items.
However, the retailer can reduce the price to whatever number suits him, while paying the exact amount of money to the manufacturers. In a way, the retailer is selling this product at loss, but he is going to make up for the “loss” through bulk sales, and by adding profit to the equipment’s accessories.
During his interview with ‘Twice Magazine’ Ben Hartman, V.P. of Amazon Consumer Electronics department said, “We believe in delivering the best possible value to our customers and we want Amazon to be the place they trust to find competitive prices.
We also believe it is in the long-term interest of manufacturers to focus on providing a fair and transparent shopping experience that best meets the needs of customers. We do not believe price controls are in the best interest of customers or support innovation. In any event, Amazon will always set its retail prices independently.“