Most people assume that MRP is the final maximum rate at which a product can be bought. Actual discussion with a few shops indicates that the MRP is inclusive of their profits and taxes if any. Few smart shopkeepers, in order to maintain and expand clientele, generally volunteer and give away discount on the MRP
Unless you are a very disciplined and organized controller of purchase at home, chances are you will go to the nearest kirana shop or your favourite supermarket, and order your grocery (I mean pick them, pushing your cart), as per list in hand, and some loose papers that were stuck on your fridge, check out by either by paying cash or use your credit/debit card!
You may be just busy as your wife and if she is also working, this chore may be done in a hurry. Methods of purchase may vary from one household to another, but in the end, it may not surprise you to note that you are being regularly cheated by your grocery supplier, all because you did not take the trouble to ask for price ‘reduction’ or discounts on the MRP printed on the packets of various items you buy on a regular basis.
Frankly, most people assume that MRP (Maximum Retail Price) is the final maximum rate at which a product can be sold to you, all because it is printed on the packet. We continue to assume that there is ‘somewhere’, some regulation that ensures that the consumer is not ‘overcharged’ and that the price printed on the packet is the ‘maximum’ payable!
These are far from truth.
Actually, the definition of MRP is as under:
...MRP is the maximum retail price or the upper limit on the price of a good set up by the manufacturer or distributor of a good on retailers or final point of sale purchases...
A maximum retail price is somewhat similar to a price ceiling in the sense that it puts an upper limit on price...
However, price ceiling typically refers to a mandatory ceiling imposed by a governmental or regulatory authority while MRP refers to an upper limit on price that is agreed upon between the manufacturer/distributor and the various retailers...
It includes all the taxes levied on the product.
Actual discussion with a few shops indicates that the MRP is inclusive of their profits and taxes if any applicable. A smart grocery shopkeeper, in order to maintain and expand his clientele, generally volunteers and gives away a discount or reduction on the MRP printed on the package of the product.
A further investigation revealed that while my own regular grocery supplier was happy to give a discount, he was unable to give the exact details of the discount structure (because of the large number of items that were being handled in his outlet), but mentioned that it varied from 10% -15%, normally, though, in some cases, it was much higher. He always gave a minimum of 5% discount on my purchases but would charge 2% if I were to use a credit card, as he had to shell this out, as handling charges. Cash and debit cards were accepted without any hassle.
This discussion took us to the question of 500 ml pack of til oil for lighting lamps at home, supplied by Aanjaneya Agrotech of Bangalore. The MRP was Rs62 but the grocer charged me Rs40 only! The printed label had a warning notice that it was not meant for ‘consumption’ but only for lighting lamps, as it contained a mix with RRB oil (don't know what it meant); but on the back side of the same pack, it had stated that it is mixed with "RB oil". I am trying to find out the difference between the two!
In the case of Britannia biscuits, a Milk Bikis pack was originally priced at Rs10, on which we got a 5% discount; a new double pack (twice the same quantity) has been introduced, but now has been priced at Rs22 (instead of Rs20), on which a Re1 discount has been given.
The only subtle difference is that Britannia has managed to make the sale for double the quantity, but increased the price by 10%. This is rather unfortunate that it treats the customer like this...
In a likewise manner, Hopcoms have increased the price of 20 micron bags from Rs2 to
Rs2.50; Namdharis, the Organic food stuff guys have simply doubled the price of their carryon micron bags from Rs2 to Rs4 and Kentucky Fried Chicken continues to push their sale of items and encourages the buyers to take the bags and charge for it too!
What is the redeeming feature in these bags? They continue to be printed in at least two languages, and our irresponsible citizens, use them, not to recycle, as much as throwing away their garbage everywhere, as though the cattle can read! (Read
Retailers flout norms, make consumers pay for paper bags )
(
AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
and what are the Excise liability of Manufacturer for MRP ??
Because selling price is 1/3 than MRP.
In this case is there any tax liability on Manufacturer ?
but every products comes under less than MRP is difficult.
I don't know, but i heard about E360.in retailers doing 5% less than MRP for each and every products.
lets wait and see.
Have checked expiry dates of soft-drinks and perishable items. They were never close to expiry date.
Check business standard, which explains how Dmart manages to sell things at such discounts.
What we, as consumers need to do is to demand our right to a discount/reduction in price; if ten people in the locality demands its, then the kirana shop or supermarket will wake up and realise that they cannot fool around anymore/
Dont you remember the old adage? that mother gives milk to the child when it cries?
You have to really howl, growl and demand your share of the the MRP to get it!
What we, as consumers need to do is to demand our right to a discount/reduction in price; if ten people in the locality demands its, then the kirana shop or supermarket will wake up and realise that they cannot fool around anymore/
Dont you remember the old adage? that mother gives milk to the child when it cries?
You have to really howl, growl and demand your share of the the MRP to get it!
Though DMart might be a small fry compared to these biggies, it is the only one, who has understood the model of selling at discount to MRP.
They have offer minimum discount of 2% on MRP with or without credit card on all MRP items.
I remember reading Walmart CEO's comment somewhere, where he said, if there is someone who has understood Supermarket business, it is DMart.
Please note that I am in no way related to DMart. Just my 2 cents.
This practice is prevalent in all Automotive spare part markets.same item when sold as original spare has a different MRP and same item when sold by actual manufacturers directly has different MRP.
This practice also is prevalent in all Imported goods when same item is Imported by different Importers.
Like Tiharwaleji pointed out this biz of MRP may "act" as a guideline; first step is to ensure that shop keepers do not charge more than the MRP mentioned in the packs and the second move is to demand a price discount.
It is common knowledge that shopkeepers tend to push items which gets them high profits; they are go to the extent of saying that "even though expiry date" is mentioned, "you can still use consume it" for another six months! I am told this is possibly true in most cases, but we have to make our own judgement in case of edible items!
So it is better to buy monthly groceries from Hyper markets who at least employ less educated citizens and provide enployment and pay at least taxes whereas your neighbourhood lala still behaves like Kanhiyalal and lala as depicted in Roti Kapda aur Makaan.
Ramdasji plaese explain why MRP should be there at all. why we cannot be happy with EX facory price and well defined Sales Tax and excise duty.
A small gricery shop also gives 2-5% discount on all branded items. We should ask for it.
You will find them easily, as it is always crowded, and they would offer this service on their own.
There may be others in other localities - we need to find them and publicise such information, as a gesture of goodwill and friendship to our neighbours
As for Jaykayess, I am also generally aware how manufacturers do the costing. For example, it would be nice if some readers from Mumbai, Srinagar, Ahmedabad or Port Blair say how much its costs them to buy Milk Bilkis of Britannia Biscuits. Naturally, the maker will take into account all relevant factors before printing out his price level on the packet, or even adopt a uniform rate, by taking into account a representative size/weight etc. The point that I make is that there are no official controls and guidelines on these matters and the consumer is left in the dark.
The crux of the matter is that by identifying the price as MRP, it tends to give an impression in the minds of people that it is a rate fixed by someone in authority. To be honest, I was told this by the shopkeeper until I made this investigation.
Writing on the subject is to enlighten the reader that he/she can demand and get a discount because it is available for asking. Like MDT has mentioned, I buy some Rs 2500 worth of medicines every month and the shopkeeper did not give any reduction; when my wife went to buy from another shop, she was offered the discount, and after hearing from her, I demanded from my supplier, and he sheepishly admitted that he had "overlooked" this aspect for a "regular" customer, and am getting 5% discount.
You need to demand it to get it and I can assure you Jaykeyess that there are variable costs involved for manufacturers when supplies are to be made in a country like India.
Buyer beware or cavet emptor is what this article tries to pass on to its reader.
A manufacturer takes his "basic" price (also known as ex-factory price), then adds the following components on top of it: Excise duty, sales tax, freight, octroi, LBT, handling, dealer margin, storage costs, etc. (Note that some of these components may not be applicable on all items or in all states).
Now, the catch is that actual costs for each of these components vary from state to state, city to city, and even dealer to dealer. So every dealer has a different landed cost. There are two major consequences of this variation:
1. Every dealer cannot give the same discount - some are able to offer higher discounts. But the catch is that the end customer (i.e., you an me) have no way of knowing which component is lower or higher for that particular dealer.
2. The MRP is calculated based on the HIGHEST possible value of each component. For example, it could include sales tax for Kerala, octroi for Mumbai, shipping costs for Nagaland, and storage costs for Jammu!!! So that's why no dealer is supposed to charge more than the MRP.
Under these circumstances, and until we have complete uniformity of local taxes across the country, it is impossible to totally eliminate these discrepancies.
That's the price the consumers have to pay for at least some degree of protection. For thos who remember, before the introduction of MRP, packages used to mention the price as Rs.X, and then there were the ominous words "Local Taxes Extra", and the dealers used to charge completely arbitrary amounts as local taxes - it was jungle law.
So personally, I would rather have the MRP regime than go back to the old system. After all, nothing in life is perfect.