Recommended Retail Price: How Do You Know If Your Price Is Right?

Setting a Recommended Retail Price (RRP) can feel like walking a tightrope. Price too high and you risk scaring customers off. Price too low and you cut into your margins or undermine your brand.

On top of that, there are important Australian pricing laws you need to follow when you use RRPs in your sales materials or negotiate with stockists. Get it wrong and you could attract complaints, refunds or penalties.

The good news? With a clear framework and an understanding of the Australian Consumer Law (ACL), you can set an RRP that’s competitive, profitable and compliant. In this guide, we’ll cover what RRP means in Australia, the key legal rules, and practical steps to test whether your price is “right” for your market.

What Is A Recommended Retail Price (RRP) In Australia?

RRP is a price suggested by a manufacturer or supplier for retailers to charge consumers. It’s common in categories like electronics, beauty, fitness, homewares and FMCG, where multiple retailers stock the same product.

Two important points:

• An RRP is a recommendation only - retailers can sell above or below it (unless a specific pricing rule applies by law, which is rare and industry-specific).
• When you show an RRP in advertising or on packaging, the number must be honest and not misleading. It should reflect a genuine recommended price for that market and period, not an inflated figure used to exaggerate discounts.

You’ll also see terms like MSRP (manufacturer’s suggested retail price). In Australia, RRP and MSRP are generally used in the same way. The key is ensuring you use them lawfully and transparently. For more on terminology and compliance basics, see our guide to RRP vs MSRP.

Is It Legal To Set Or Use RRPs? Key Rules Under The ACL

Yes - you can set and promote an RRP in Australia. However, several ACL rules and competition law principles apply to how you set, communicate and use pricing.

No Resale Price Maintenance

You can suggest an RRP, but you generally cannot force a retailer to sell at or above that price. “Resale price maintenance” (pressuring or requiring minimum prices) is prohibited under Australian competition law. Discounts, promotions and clearance pricing are the retailer’s choice.

Misleading Or Deceptive Conduct

All pricing representations must be accurate and not mislead consumers. That includes any “was/now” claims, “save X% off RRP” statements and strike-through prices. If you reference an RRP, it should be a real recommendation that reflects current market conditions. Using inflated RRPs to create the impression of a bargain can breach the ACL’s misleading conduct provisions. Read how the law approaches misleading or deceptive conduct.

False Or Misleading Price Representations (Section 29)

Section 29 of the ACL specifically prohibits false or misleading representations about price, discounts or the existence of a “usual” or “strike-through” price. This is particularly important when you compare your current price to an RRP or a past price. Get familiar with Section 29 of the ACL before rolling out comparison pricing or limited-time offers.

Advertised Price Laws And Component Pricing

When you advertise a price, you must show the minimum total price a consumer will pay (including mandatory fees, taxes and unavoidable charges). This is called component pricing. For instance, if shipping or a booking fee is unavoidable, be upfront about it early in the purchase journey. Our guide to advertised price laws covers the key do’s and don’ts.

Practical Compliance Tip

If you’re unsure whether your promotion is compliant, it’s wise to get tailored advice early. Our team can help you stress-test claims and materials under our ACL consultation service so your launch campaign is low risk and high impact.

How Do You Decide If Your RRP Is “Right”? Practical Pricing Framework

Legality is non-negotiable - but a “right” RRP also needs to work commercially. Here’s a simple framework to set and test your price, then refine it with data.

1) Understand Your Costs And Required Margin

• Direct costs: product, packaging, freight from manufacturer, duties.
• Indirect costs: marketing, warehousing, customer support, warranty handling.
• Retailer margin: if you wholesale, factor in the retailer’s markup and promotional allowances.

Work backwards from a realistic retail price to confirm there’s enough margin at each level (you, distributor, retailer). If the numbers don’t stack up, revisit product specs or channel strategy rather than forcing an unrealistic RRP.

2) Map The Competitive Landscape

Benchmark against comparable products - not just the closest rival, but the range of alternatives a customer might consider at that price point. Consider brand equity, quality, unique features, warranties and returns experience (these shape perceived value).

3) Decide Your Value Positioning

Will you be premium, value-for-money or entry-level? Your positioning should be obvious at a glance from your story, packaging and price. A mid-market product with a high-end RRP can confuse customers unless you justify the difference credibly.

4) Pressure Test With Real Customers

Before locking in nationwide packaging or retailer deals, run small tests. Pilot with an online channel, A/B test price points or offer bundles. Look at conversion rates, returns, reviews and repeat purchases.

5) Account For GST And Surcharges

Make sure your displayed RRP includes GST if it’s marketed to consumers. Be transparent about any unavoidable fees. Hidden costs erode trust, can hurt conversion and risk breaching component pricing laws.

6) Build In Promotional Levers

Leave room for discount events (e.g. EOFY, Boxing Day), but avoid conditioning customers to wait for a sale. Consider value-adds (bundles, loyalty rewards) as an alternative to blanket price cuts.

7) Document The RRP Rationale

Keep a short record of how you set the RRP and when it will be reviewed. This helps ensure your recommended price remains genuine, particularly if you use it in savings claims later.

Quick Compliance Checklist

1. Confirm your displayed price includes mandatory charges and GST where applicable.
2. Ensure any “save X% off RRP” claim is accurate and supported by a genuine current RRP.
3. Avoid pressuring retailers to sell at or above RRP (no resale price maintenance).
4. Use clear timeframes and conditions for promotions, avoiding ambiguous small print.
5. Review pricing copy for risks under misleading conduct and price representation rules.

Using RRPs In Advertising: Do’s And Don’ts

RRP-based marketing is effective - when used carefully. Here’s how to stay on the right side of the ACL.

Do: Use Genuine, Current RRPs

If you quote an RRP, ensure it’s real for the relevant market and current period. Retiring a model? Update the RRP you reference. Launching new packaging? Confirm the RRP still reflects your pricing strategy.

Do: Be Clear And Specific With Comparisons

When you say “save $50 off RRP,” specify the product, model and timeframe. If the saving varies by colour or bundle, spell that out. Ambiguity can tip an ad into being misleading.

Do: Disclose Material Conditions Upfront

If a discount excludes certain SKUs, is limited to first-time buyers, or requires a minimum spend, show that prominently wherever the price claim appears - not just on a separate page.

Don’t: Inflate RRP To Create “Phantom” Discounts

Inflated strike-throughs or RRPs used only to make a current price look like a bargain can be misleading. If the RRP has not been genuinely used as a recommendation in your market, don’t rely on it in your ads.

Don’t: Bury Unavoidable Fees

Component pricing means the headline figure should reflect the total minimum price. Avoid drip pricing (revealing mandatory fees late in the checkout), which can be unlawful under advertised price laws.

Online Stores: Policy Pages That Support Pricing Compliance

If you sell direct-to-consumer, clear website documents help set expectations and reduce complaints. It’s sensible to publish Website Terms and Conditions that cover pricing, offers, shipping and returns, and a Warranties Against Defects Policy where relevant. These sit alongside your refund obligations under the ACL and your product guarantees - policy pages don’t replace the law, but they help you communicate it clearly.

Selling Through Retailers: RRPs, MAPs And Contracts

If you wholesale to retailers, RRPs sit within a broader commercial relationship. Keep these legal guardrails in mind.

RRPs Are Optional For Retailers

Suggesting an RRP is fine; attempting to enforce a minimum resale price is not. Avoid contract terms, emails or incentives that effectively require retailers to sell at or above RRP.

Consider Contract Terms That Don’t Dictate Retail Price

Instead of minimum pricing, think about wholesale pricing tiers, volume discounts, launch marketing support and brand presentation standards. These can be set out in a Distribution Agreement or reseller terms that focus on supply, territory, stock handling and brand guidelines - not retail price control.

Promotional Coordination Without RPM

You can coordinate joint marketing (e.g. a seasonal promotion) by agreeing wholesale discounts or co-op marketing contributions for a period, while leaving final shelf price up to the retailer. Be careful that communications and incentives don’t stray into pressuring the retail price itself.

Stay On Top Of Marketing Claims

Whether you or your retailer create the ad, both parties can be exposed if a price claim is misleading. Provide retailers with current RRPs, clear product copy and promotional rules to reduce risk for everyone.

Internal Governance For Pricing

Train your sales and account teams on the basics of resale price maintenance and the ACL. A single email pressuring a retailer on pricing can create legal risk. Build simple sign-off processes for price-related marketing.

Key Takeaways

• RRP is a lawful recommendation in Australia - not a requirement. Retailers can sell above or below it, and pressuring a minimum resale price is prohibited.
• Any price claim must be truthful. The ACL bans misleading or deceptive conduct and false price representations, including “was/now” and “save off RRP” if they’re not genuine.
• Advertised prices must include mandatory fees and taxes. Avoid drip pricing and make material conditions obvious wherever the price is shown.
• The “right” RRP balances costs, competition and positioning, then gets validated through small tests and customer data - and updated when the market changes.
• If you wholesale, use contract levers like wholesale tiers and brand standards rather than trying to control retail price. Document your arrangements in clear, lawful agreements.
• For online stores, clear policy pages (like Website Terms and a warranty policy) support transparent pricing and reduce disputes - they sit alongside your ACL duties to customers.

If you’d like a consultation on setting and using RRPs for your Australian business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.