Why is there no MRP in US? Here's how American pricing works

In India, every packaged product comes with a printed Maximum Retail Price (MRP). This is the maximum amount a retailer can legally charge, and shops across the country are bound by it. But in the United States, there’s no MRP. Products can be sold at any price a shop chooses, leading to different prices for different stores, even for the same item. So why does this difference exist?

No legal price cap: Retailers set their own prices

The American system is rooted in free-market economics. There’s no law limiting how much a store can charge for a product. Instead, retailers are free to set prices based on factors like:

• Location

• Local demand

• Stock availability

• Competition

• Business strategy

This means a bottle of shampoo could cost $5 at one store and $7 at another, even in the same city, and both prices are legal.

Suggested prices exist, but they’re just suggestions

Manufacturers in the US often print a Suggested Retail Price (SRP) on packaging, but this isn’t binding. Retailers are not required to follow it. They can sell a product below, at, or above the SRP. This allows stores to offer discounts, bundle deals, or markups as they see fit. Because there’s no MRP law, pricing is regulated by competition instead. If one supermarket prices an item too high, a competitor can undercut them.

The US once tried price control, and dropped it

The US experimented with stricter pricing rules in the past. Until 1975, manufacturers could sign Fair Trade agreements with retailers to sell items at a fixed price. But Congress banned this practice, calling it anti-competitive. However, a legal workaround from 1919 still exists. It allows unilateral pricing, where manufacturers can cut off retailers who sell below a certain price. Brands like Bose famously used this method to maintain their premium image and prevent price drops that could harm their brand value.

Why does MRP exist in India but not in the US?

India introduced MRP rules in 1990 under the Standards of Weights and Measures Act, mainly to prevent:

• Tax evasion

• Overcharging

• Retail profiteering