MRP Full Form

What is the full form of MRP?

The full form of MRP is the Maximum Retail Price. In simple words, It refers to the very best price that can be charged for the product in the country. It's calculated by the product manufacturer. Together with the cost price, it includes shipping costs and any government taxes that are imposed on this product. However, retailers can sell it below MRP. In India, all products are marked with MRP in order that the customer can know the highest price at which the product can be sold or bought. This prevents sellers from selling products at a price above the MRP. However, there are still many cases where the merchandise is sold at a higher price than the MRP, for instance, in tourist places, especially hill stations, where the products aren't easily available, retailers charge quite the MRP. MRP was introduced in India in 1990 following the amendment of the Weights and Measures Standards Act, of 1997.

This Story also Contains

1. What is the full form of MRP?
2. Why MRP Was Criticized?
3. How Do You Calculate MRP?
4. Options For Consumers If Retailers Charge Quite MRP
5. MRP Critics

Why MRP Was Criticized?

The concept of MRP has been criticized in comparison to a free market system because, in the case of MRP, the manufacturer decides what proportion of profit the retailers earn. it's easy to manipulate MRP like cooling charge for cold drinks. The manufacturer can set the MRP to 10 times the expected selling price. Retailers in rural areas cannot charge quite MRP to offset the higher cost of transportation, so most of the things are out of stock and therefore people living in rural areas do not get many different products to buy.

MRP is governed by the Legal Metrology Rules, PCR, 2011

As per this rule:

All packed commodities should be labeled and therefore the label must contain a declaration and the MRP

After the amendments to the Pre-Packed Commodities Rules 2011, the products displayed by the seller on the online e-commerce platforms must contain information about the name and address of the manufacturer, packer, and importer, net content, MRP, customer care number, etc.

Medical devices like valves, syringes, thermometers, etc. must indicate MRP and declaration as per PCR.

There shouldn't be two MRPs on one single product.

The font size of the MRP and other information like the expiry date should be large so that consumers can easily read it.

How Do You Calculate MRP?

The marginal revenue product is calculated by multiplying the marginal physical product (MPP) of the resource by the marginal revenue (MR) generated. The MRP assumes that the expenditures on other factors remain unchanged and helps determine the optimal level of a resource.

Formula :

Maximum Retail Price = Manufacturing Cost + Packaging Cost + margin of profit + CnF(Cost and Freight) Margin + Stock Margin + Retail Margin + GST + Shipping + Marketing or Advertising Expenses + Other Reasonable Expenses

Options For Consumers If Retailers Charge Quite MRP

If a seller charges GST(Goods and Service Tax) above the utmost retail price, the buyer can file a complaint against them. A consumer can file a complaint with the ministry or several anti-profiteering commissions founded in India. The Central Government of India has founded the National Anti-Profit Authority to check whether the ITC availed by the registered person or reduction in tax rates has actually resulted in price reduction and whether the same is passed on to the consumers.

MRP Critics

Since its introduction, the concept of MRP has been much criticized.

Here are a number of the reasons for characterizing MRP :

1. MRP was criticized at the time when it had been compared to a free market system because, at the maximum retail price, manufacturers are liable for deciding the price and what profit the retailers will make.

2. There are certain ways to control the MRP by adding additional production quantities, like adding a cooling charge for cold drinks.

3. Sometimes a manufacturer can set a product's MRP up to 10 times the expected selling price.

4. People in rural areas aren't getting many different products because retailers don't have most of the items in stock because they can't charge more than MRP in rural areas to adjust for higher transportation costs.

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