The Paradox of MRP

Have you ever thought why some grocery item are cheaper in Paro or Thimphu than in Phuntsholing? Why does different shop charges different prices for the same item in the same location? 


MRP basically stands for Maximum Retail Price of a commodity i.e means the commodity should be sold at the same price MRP or lesser than MRP (the reason is it is the maximum retail price). When a item or a good is manufactured from a factory, to fix a price the management has to prepare a cost sheet, generally the overhead cost incurred would be calculated and then profit would be planned and then the price is fixed. Suppose the overall overhead cost (raw materials, labour cost, transportation, other costs per unit is Nu. 80 then the management plans for profit of Nu. 20 and then fixed the MRP at Nu. 110 or Nu. 120 (Nu=Re) The difference between MRP and the factory price (Nu. 80 + Nu. 20 profit) is assumed or allocated for transportation from factory to market or can be said as wholesale charges which would include the taxes payable to the government and other indirect taxes.

I have different questions in my mind always, few of which i have highlighted below.

Why is RGoB (trade) trying to impose MRP rule to the products in the market more importantly when the products are imported from India and not made in Bhutan (manufacturing or package)?

Why is the price (MRP) higher for the products of Bhutan (local) than the products imported from India though the products imported from India have to be paid tax. For eg: The tazaa milk from India is available at Nu. 45 and the milk Duyul (Bhutanese) is sold at Nu. 48/-

Why is there difference in prices in the same locality for the same product? What I mean is, for example Thimphu, say everyday milkpowder... the price varies from one shop to another.

Why is some products sold at much higher price than the MRP? One such product is the ice cream. The ice cream's MRP was Nu. 10 and was sold at Nu. 30/- why? Another such product is the shoe. Shoes are usually marked Nu. 600-800 and sold at Nu. 1,200-1500/- why?

Why all products don't have MRP label? Vegetables or nature grown products wont have, but then some of the packaged espically products from Thailand do not have MRP, why so?

Most of the shops, prices are fixed with a marker pen or the shop label.... saying such and such price. If it is allowed, why MRP?

If MRP is the highest price that a shop keeper can fixed, then why most of the products, the price is higher than the MRP.

Is MRP rule applicable to far flunged places like Laya, Gasa etc... if it is not applicable, why is it applicable to other places. If it is applicable, who would bear the loss of the shop keepers...?

Why in some cases, the price of the products is much lower than the MRP? especially in medicines, if the MRP is Nu. 100/- the medicine is sold at Nu. 80/- why?

What never goes in my brain is WHY for a same product, the prices in border towns is higher than in Thimphu or Paro (say other town). Everyday milk product... Nu. 250 MRP, it is sold at same MRP in Pling / Samtse shops but it is available at lower price in Thimphu at Nu. 240/- in few shops. Why shops in PLing charge at MRP whereas shops in Thimphu charge below it.W

What is more surprising is, some shops in Jaigoen charge at MRP , higher than the products sold in Bhutan (for the products from India). What the hell is it? Are the Indian products exported from Bhutan especially, milk powder and groceries...

What is a sales tax? though I am a finance professional, I always wonder why is sales tax charge to the consumer in a hotel when we consume only for the food.

If sales tax is compulsory, then why do small restaurants, hotels do not charge the sales tax where as big hotels do charge, why?

Many questions are coming from my brain, but I would stop here... Answers to the above queries would be appreciated. However for people who have the same queries as me, please stay with my blog.. answers would come in future blogs. I am compiling the answers.