MSRP and recommended retail price: How much can a retailer deviate from them?
Fabrice Decroo
Consulting Director
August 31, 2026
In France, a suggested retail price (SRP) is never legally binding on the retailer: the retailer remains free to sell at a higher or lower price without risking penalties from the supplier. What the law prohibits is the imposition of a minimum price —a practice that has cost several major corporations hundreds of millions of euros in fines in recent years.
A supplier lists a “suggested retail price” on its product page. Can a retailer sell at a price 15% below this without risking being delisted or facing penalties? The answer lies in a simple—yet often misunderstood—principle: in France, retailers’ freedom to set prices is the rule, while price fixing is the prohibited exception. This guide explains what the law actually says and how to turn this freedom into a pricing lever rather than a source of uncertainty.
MSRP, recommended retail price: What does this mean?
The PDSF (manufacturer's suggested retail price) and the recommended retail price (RRP) refer to the same concept: a price recommended by the manufacturer or supplier for the resale of its product to the end consumer. In English, these are referred to as MSRP (Manufacturer's Suggested Retail Price) or RRP (Recommended Retail Price).
The keyword is "recommended." It is neither a contractual obligation, nor a minimum, nor a maximum: it is a guideline provided by the manufacturer, which the distributor is free to follow, ignore, or exceed in either direction.
The principle: virtually complete pricing freedom
French law has long settled this issue. The ordinance of December1, 1986, established the principle of free pricing: prices forgoods and services are freely determined by market competition, except in cases expressly provided for by law (certain regulated products, such as books and tobacco).
For a distributor who purchases a product from a supplier to resell it, this principle is simple: the distributor sets the selling price as it sees fit. The MSRP listed by the manufacturer is not binding —neither legally nor contractually—unless the distributor has explicitly agreed to it under very specific conditions (which are rare in practice for consumer retail).
What the law actually prohibits: mandated minimum prices
What competition law penalizes is not the act of recommending a price—it is the act of imposing it, either directly or indirectly. An imposed minimum resale price remains prohibited regardless of its form: threats to delist products, commercial pressure, or a contractual clause that penalizes a distributor who does not comply with the suggested retail price.
a fine imposed bythe Competition Authority on October 29, 2024, on Schneider Electric and Legrand (manufacturers) as well as Rexel and Sonepar (distributors) for a vertical price-fixing cartel in the low-voltage electrical equipment sector—the practice involved resale prices imposed through framework distribution agreements (Competition Authority).
A more subtle point that is often misunderstood: a supplier may, however, impose a maximum resale price —for example, to harmonize prices within a selective distribution network or a franchise. It is the minimum price that is protected by law, never the maximum.
What a supplier can and cannot do
Show a suggested retail price
Publishing a SDS on product pages, in catalogs, or in marketing materials—as long as there are no consequences for noncompliance.
Set a maximum price
Set a resale price limit, particularly in a selective distribution or franchise network, to protect consumers from excessive prices.
Imposing a Penalty for Deviating from the MSRP
Delisting a product, delaying a shipment, or reducing commercial terms because a distributor is selling below the suggested retail price.
Imposing a minimum price, even if disguised
A “suggested price” clause, when accompanied by pressure or systematic monitoring, may be reclassified as a de facto fixed price—the contractual form does not protect this practice.
This is the initial fine imposed bythe Competition Authority on March 16, 2020, on a manufacturer and two of its French wholesalers for resale price maintenance, which was reduced to approximately €425 million on appeal — one of the heaviest penalties ever imposed in France on these grounds, illustrating the extent of the risk for a supplier who crosses the line between recommending and imposing a price.
Why Do Some Retailers Still Adhere to the MSRP?
If the law protects such broad pricing freedom, why do so many retailers still set their prices in line with the MSRP? Three reasons are most commonly cited, none of which are related to any legal requirement:
- Operational simplicity. With a product lineup consisting of several thousand SKUs, using the default MSRP avoids the need to set prices on a product-by-product basis—which often results in suboptimal profitability.
- Market consistency. In certain categories (consumer electronics, strong-brand products), a discrepancy in the MSRP that is too noticeable can cloud the perception of a product’s value, even in the absence of any legal requirement.
- The supplier relationship. Even without legal leverage, a strategic supplier remains a business partner: purchasing terms, supply priority, and marketing support may, in practice, depend on a relationship deemed to be balanced—without this constituting a price imposed in the legal sense.
These three reasons are valid. The problem arises when they become an unquestioned habit: adhering to the MSRP by default, without ever checking whether a deliberate deviation would improve profit margins, competitiveness, or sales volume.
Use the MSRP margin as a tool, not a constraint
Once pricing freedom has been established as a principle, the real question becomes an operational one: for which products should we deviate from the MSRP, by how much, and why? The answer is directly linked to the break-evenanalysis detailed in this report: deviating from the MSRP only makes sense if the impact on volume offsets the impact on unit margin.
Distinguish high-visibility references from others
For KVI products, a deviation from the MSRP is noticeable and can be compared; on the shelf, it goes largely unnoticed by customers.
Quantify the impact on the margin for each proposed variance
Systematically aligning prices with the MSRP is never neutral: it locks in a margin level that could be optimized on a product-by-product basis.
Document the selected policy
Consciously decide whether to follow or deviate from the MSRP category by category—rather than doing so by default, without making an explicit decision.
Reevaluate regularly
A MSRP doesn't change at the same pace as the market: a price difference that makes sense today may no longer be relevant in six months if the competition has changed.
The MSRP as a guideline, never as a default rule
Booper's module Pricing Optimization Software in Booper allows the MSRP to be integrated as another metric in the business rules engine—alongside target margin, competitive positioning, and price-image—rather than as a default starting point. For one of our clients in the food industry (a chain with over 1,700 retail locations in France), this approach made it possible to establish a pricing governance framework in which every price deviation—including deviations from a supplier’s suggested retail price—is based on an explicit rule rather than on habit.
Check out the module on our page Pricing Optimization Software.
Before setting a price based on the MSRP
- Can you tell the difference, in your supplier contracts, between a suggested price and a clause that amounts to a de facto fixed price?
- Is your adherence to the MSRP a conscious decision, or an unquestioned habit?
- Have you quantified the impact on margins of a targeted price adjustment for your high-volume products?
- Can you tell the difference between highly visible references—where the discrepancy is obvious—and those where it goes unnoticed?
- Is this policy reviewed on a regular basis, or has it remained unchanged since the supplier contract was signed?
Would you like to take a more objective approach to your policy on suggested retail prices?
30 minutes with our team to incorporate the PDSF as a guided reference point, not as a default reflex.
FAQ
No. In France, the principle of price freedom established by the ordinance of December 1, 1986, allows retailers to freely set their resale prices—above or below the price recommended by the supplier—without risking contractual penalties from the supplier.
The MSRP (manufacturer's suggested retail price), also known as the recommended retail price (RRP) or PDSF in French, is a price recommended by the manufacturer for the resale of its product to consumers—a guideline, never a contractual obligation.
A supplier may impose a maximum resale price (for example, to protect consumers in a selective distribution network), but never a minimum price. Imposing a minimum resale price—whether directly or indirectly—remains prohibited under competition law.
Heavy financial penalties imposed by the Competition Authority: 470 million euros in October 2024 in the electrical equipment sector, or nearly 425 million euros on appeal in another case from 2020. These amounts illustrate that the legal risk is real, even when the practice is disguised as a “suggested retail price.”
For reasons of operational simplicity when dealing with a broad product range, perceived consistency with the market, or to maintain a balanced relationship with a strategic supplier—legitimate business reasons, independent of any legal constraints.
By treating the MSRP as just one of several benchmarks in the pricing rules engine—along with target margin, competitive positioning, and product visibility—rather than as the default starting point, and by systematically quantifying the margin impact of each proposed deviation.
Also in this series
- Calculating Sales Margin: The Complete Guide to Managing Your Profitability
- Front Markup, Back Markup: The True Profitability of a Product in Mass Retail
Sources: Légifrance, Ordinance No. 86-1243 of December 1, 1986, on freedom of pricing and competition · Competition Authority, decision of October 29, 2024 (low-voltage electrical equipment) · Competition Authority, decision of March 16, 2020, upheld on appeal
Lowering a price almost always leads to higher sales—that’s never the issue. The real question is whether the additional volume generates enough profit to offset the profit lost on each unit already sold. The answer depends on two figures that are rarely considered together: the product’s markup rate and its actual price elasticity.
In the retail sector, a product’s profitability is never fully reflected in its selling price. Part of it is determined on the shelf (the front-end margin), while another part is negotiated separately with the supplier, off the sales receipt (the back-end margin). Managing one without the other means managing an incomplete picture of profitability—and often, without realizing it, an underestimated one.
The margin, markup, and margin rate do not measure the same thing, and confusing them distorts all the resulting pricing decisions. Once these definitions and their formulas are established, the real question becomes an operational one: how can you maintain an accurate view of your margin when it changes every week, product by product, rather than recalculating it once a quarter in a spreadsheet?