The full form of MRP is the Maximum Retail Price. The maximum retail price or MRP is the highest possible price that can be charged for a particular product in a particular country.
The maximum retail price is calculated by the manufacturer of that product. The maximum retail price is calculated by adding cost price, transportation cost as well as all other government taxes that are being levied on that particular product with varies from product to product.
In some cases, the product can be sold below the market price by the retailer. All kinds of products are labelled with the Maximum retail price mentioned on it in India which allow customers to know the highest price of that product at which it can be sold and brought.
Maximum retail price is a way to prevent sellers and retailers to sell a particular product at a price higher than the market price. However, some products can be charged more than MRP mentioned such as in tourist places especially in the hill stations where those products are not available easily. So the retailers charge more than the maximum retail price. The concept of Maximum retail price was first presented in 1990 in India following the amendment of the Standards of Weights and Measures Act, 1997.
Since its launch, the concept of MRP has been criticized a lot. Here are some of the reasons behind the characterisation of MRP –
- MRP was criticised the time it was compared with the free market system because in Maximum retail price manufacturers are responsible to decide the price and what profit retailers will be making.
- There are certain ways to manipulate the MRP by adding extra production amounts such as adding a cooling charge for cold drinks.
- Sometimes the manufacturer can set the MRP of the product up to ten times of the expected price of sale.
- People in rural areas don’t get much variety of products as the retailers don’t stock most of the items because they can’t charge more than MRP in rural areas to set it up to the higher transportation cost.
Legal metrology rules, PCR, 2011 governs the maximum retail price concept and according to this rule –
- All the packed products must be labelled containing MRP and declaration of the product.
- The goods shown by the seller on an e-commerce store must have all the information such as the name and address of the manufacturer, packer and importer, net content along with MRP and customer care number.
- There can’t be two MRP mentioned on one product.
- To make it easy for the customer to read the font size of MRP and all other information like expiry date should be big.
- The MRP and declaration on the medical devices such as valves, thermometers etc. must mention according to the PCR.
MRP new rules
The government introduced new rules for MRP after the implementation of GST these are –
- There should be at least two advertisements given in the newspaper if the price of a product increases after GST.
- The products whose price has been decreased after GST implementation don’t need to give any advertisement in the newspaper.
How is MRP calculated?
The MRP is calculated through a formula which is –
Maximum retail price = manufacturing cost + packaging cost + profit margin + CnF margin + stockist margin + retailer margin + GST + Transportation + Marketing or advertisement expenses + other reasonable expenses
Does MRP include GST?
Yes GST is included in MRP because the name itself Maximum retail price says that it includes all kinds of costs and expenses including all types of taxes which contains GST as well. So the retailers can’t charge GST separately over the MRP mentioned on the product.
Who introduced MRP in India?
The concept of the maximum retail price was introduced by the Ministry of Civil Suppliers, Department of Legal Metrology etc. in 1990 through an amendment to the standards of Weights and measures act which is also called packaged commodities’ rules of 1976.
Some other famous full forms of MRP
MRP- Manufacturing Resource Planning- an integrated information system used in business
MRP- Material Requirement Planning- in manufacturing plants
MRP- Mutual Recognition Procedure- in military
MRP- Major Research Paper- in Academics