Recommended Retail Price (RRP)

By definition, RRP or Recommended retail price is the price at which the manufacturer suggests the retailers to sell its product.

The RRP generally tells all the manufacturing and selling costs associated with a product.

It is also known as the list price or the sticker price, or the manufacturer’s suggested retail price (MSRP), or the suggested retail price (SRP).

Its main purpose is to keep the prices the same everywhere. 

The recommended retail price usually applies to branded products or higher-priced goods, such as electronics and appliances.

The RRP is mainly to provide a reference point, manipulating the consumers’ willingness to pay for goods.

Purpose of Recommended Retail Price

The aim of the recommended retail price is to establish similarity among the selling prices at different retail locations.

The RRP is intended to control deceptive pricing practices and standardize prices of goods within a trade area of the company’s retail outlets.

The similarity of prices also seeks to ensure that basic and main goods are always available at reasonable prices without denying sellers a fair return on investment.

It makes sure that all parties involved in a deal (manufacturer, wholesaler, retailer) are able to earn profits at the end of the final sale.

Although the price is called “recommended,” retailers can sell the products purchased from the manufacturers at the RRP, as well as below it. Here's an infographic that will help understand the role of RRP:

What does RRP mean in eCommerce

For eCommerce stores and DTC brands, the Recommended Retail Price (RRP) is the ceiling price you list on product listings. Here’s an awesome recommended retail price example from Estee Lauder:

While the actual selling price is $31.20, the recommended retail price is $52.00 (which is slashed off). 

Now, this $52.00 RRP remains consistent, even if the same product from Estee Lauder sells below the originally advertised $31.20. Here’s a great example from Amazon (note how the $52.00 RRP remains consistent, but the actual selling price changes):

So, for all eCommerce folks, here’s what RRP means:

✅ RRP is the sticker price – but, in some regions (like India with MRP) or in distributor contracts, you may face restrictions; but in general, RRP itself is not legally binding

✅ You are free to sell below and above the RRP – but, do note that in some regions/contracts, RRP can act as a ceiling price, but for most eCommerce stores, it’s not completely legally binding – sellers can technically go above the RRP (though it’s rare)

⚠ That being said, RRP isn’t just a number, it has definite implications – as it controls whether a brand is seen as mass market or premium. For example, if you constantly make your product available at 30% off, the sticker price (in the eyes of shoppers) is going to be assumed as 30% off.

Why RRP Matters for eCommerce Stores

At its core, RRP isn’t just about setting the price, it’s about how you make people think about value. Here’s how an average shopper looks at RRP:

Anchors perceived value

Shoppers rarely know your costs. They only know what a product “should” cost based on the first number they see. For example, if a skincare serum carries an RRP of $130, a $99 selling price feels like a luxe deal. However, if the RRP were $95, that same $89 suddenly feels ‘meh’ – meaning that simply listing the RRP also makes discounts feel real. 

Creates perceived fairness 

Shoppers don’t mind paying less than RRP; they love it. But if the RRP looks inflated, they feel tricked. Once that perception sets in, discounts lose their power, and trust drops fast. For example, Kohl’s and J.C. Penney got dragged into lawsuits for inflating RRPs just to make discounts look bigger.

Reduces undercutting in multi-seller environments

Like the Estee Lauder example, RRP helps anchor a price – marketplace sellers like Amazon or Walmart can’t go above it, and neither can they massively undercut (like list it for $10 instead of the usual selling price).

Creates scarcity & exclusivity

During sales events or loyalty campaigns, RRP can help reinforce exclusivity. For example, “Was $120, now $89 just for members” feels like a privilege, not a gimmick, which of course, has a direct impact on conversions.

👉 Key takeaway: You shouldn't leave recommended retail price to guesswork. Set it too low, you may just leave money on the table. Set it too high, the price feels scammy. Get it right, you control how long it takes for customers to hit checkout.

How to Calculate RRP (+ Examples)

Most people think RRP to be:

RRP = Cost + Markup

But that’s how you end up underpricing. For founders, the real formula needs to account for positioning, margin, and the reality of the market you’re in. Here’s a smarter way to think about it:

RRP = Cost of Goods + Desired Profit Margin + Positioning Premium

Where:

• Cost of Goods (COGS): Your hard expenses per unit: manufacturing, packaging, shipping into warehouse, etc.
• Desired Margin: What you need to stay profitable. For many small eComm brands, that’s 50–70%.
• Positioning Premium: The brand “tax.” If you want to be seen as premium, your RRP must sit above generic alternatives; otherwise, customers may not take the brand seriously.

Example: Premium Skincare Serum

• COGS: $20
• Desired margin (60%): +$12
• Positioning premium (luxury placement): +$18
• Final RRP: $50

Sell it at $39 on your store and $45 on Amazon, and the $50 RRP still makes those prices feel like a deal.

Example: Generic Commodity (USB Cable)

• COGS: $2
• Desired margin (50%): +$1
• Positioning premium: $0 (no one cares about “luxury USB cables”)
• Final RRP: $3

On Amazon, you might still have to sell at $2.50 because the category is so commoditized, but at least the RRP will show the selling price as “discounted.”

How Can eCommerce Stores Apply Recommended Retail Price

Broadly speaking, there are only about two ways to use recommended retail price: 

a) you sell at or below the RRP

b) you sell above the RRP

We begin with when it’s okay to go below the recommended retail price or the suggested retail price:

a) When can you sell below the RRP

Excess inventory

It is good to sell the products below the recommended retail price when there is excess inventory that needs to be sold out as early as possible.

There can be multiple reasons for clearing out the inventory like the products becoming obsolete or getting perished.

We can sell way below the RRP (this is where MAP or minimum advertised price kicks in) when huge quantities are involved—but only when the manufacturers set a minimum advertised price, because extremely low prices may destroy brand image and identity.

To sum up, there are multiple factors that affect the recommended retail price (RRP) like market share stabilization, retail value chain, customers’ bargaining power, product’s demand status, marketing objectives, production expenses, and competition, etc.

During a new product launch 

Imagine you’ve just released a new fitness gadget. You know it’s worth $120, but the market doesn’t know you yet. If you insist on selling at the full suggested price from day one, you’ll sit on inventory. What most do is list it for $X off or X% off during the launch period, and keep the RRP slashed (which is there to bring out the value). And once the demand sets in, you can sell at RRP.

Competing on marketplaces

Anyone who’s ever sold on Amazon knows the pain: you can set a polished $60 RRP, but ultimately to get any sales, you’ve to match (or be close to what prices your competitors are selling at).

Navigating shifts in the market

Be it tech changes or global events, your RRP can become obsolete. For example, the RRP of most generic wired headphones changed rapidly, as wireless headphones came into the market. However, what remained constant was the prices of professional wired headphones (mainly because there was no change in demand).

When creating bundles

Bundles are where RRP shines. Let’s say you sell three skincare products separately for $199 in total. Package them as a “Glow Kit” for $129 and show the original RRP values, as “Bundle of $199 value”. Customers immediately see the math and feel like they’re unlocking a win.

Running loyalty programs and subscriptions

RRP is public, but loyalty perks aren’t. That’s what makes the comparison powerful and drives retention. This way, you not only comply with FTC guidelines but also drive retention. Take this RRP example from Beauty Pie, the RRP is ₤75, but ₤44 for members: 

The same thing applies to subscriptions as well – the focus becomes on savings – in terms of delivery fees, convenience, and price. Every delivery reaffirms the savings, making them less likely to cancel.

b) When can you sell above the RRP

Reduced availability of certain items

On the other hand, selling above the recommended retail price works when the availability of certain items in an area is less.

For example, there are very few stores that operate 24/7. Since they provide services all day long, they might charge a little higher (though it is the sole decision of the owner.)

When the demand is high and the supply is less, then also going above the recommended retail price works.

Selling something truly innovative

On the other hand, when you’re the first to market with something unique, let’s say a smart home product no one else has — clinging to a conservative RRP can hurt you. Early adopters are willing to pay a premium, and the lack of competition gives you room to stretch. Instead of defaulting to $150 because it “feels safe,” you might position at $199 and lean into the narrative of exclusivity. In this case, pushing beyond the RRP works in your favor.

Riding demand surges

High-demand moments change the game. If your product goes viral on TikTok, or it’s one day before holiday season, customers aren’t scanning sticker tags or looking at express shipping costs. Founders who recognize this will sometimes hold prices firm or even bump them slightly above the standard recommendation. For example, it’s not uncommon to see eCommerce stores charging ‘demand surcharges’ (this way, the RRP remains where it is, but the total amount billed changes).

Exclusivity and patents

Sometimes you do have leverage. If you’ve secured an exclusive distribution contract, or your product is protected by patents, you’re not in a price war. Here, it makes sense to step outside the RRP and charge a premium. Customers don’t have alternatives, and exclusivity adds weight to the price.

People Also Ask

What is the difference between RRP vs MAP, MSRP, and MRP?

This is where a lot of founders get tripped up. The acronyms all look the same, but each one has a different impact on how you can price and promote.

Here’s the cheat sheet:

RRP (Recommended Retail Price)

What it is: A manufacturer’s suggestion. It’s a perception tool, not a rule.

Binding? No.

MSRP (Manufacturer’s Suggested Retail Price)

What it is: The U.S. version of RRP; just different wording. Same play as RRP, just the American name (also called the SRP, suggested retail price).

Binding? No.

MAP (Minimum Advertised Price)

What it is: The lowest price retailers are allowed to publicly advertise. MAP protects your brand from “race-to-the-bottom” chaos in marketplaces.

Binding? Yes, enforceable in the U.S. (brands use it to stop resellers from eroding value).

Example: A brand sets MAP at $90 for sneakers with a $120 RRP. Retailers can sell for less in-store, but they can’t advertise below $90 online.

MRP (Maximum Retail Price)

What it is: A legal price ceiling — most common in India (by law) and the EU (by contractual obligation). Retailers cannot sell above this price. If you’re selling internationally, know where MRP rules apply — mispricing = fines or product bans.

Binding? Yes, by law.

👉 Key takeaway: RRP is like an anchor, MAP is a guardrail, and MRP is a legal ceiling. Any mix up, will almost always end up losing trust or worse, be hit with compliance issues. 

Related reading:

eCommerce Pricing Tactics: 20 Smart Examples To Help You Sell More

BTW, if you're not happy with your store's sales 👇