The manufacturer suggests a retail price, but it is up to the retailer to determine what the consumer ultimately pays.
This is quite different because in retail the wholesale cost is negotiated between the manufacturer and retailer. Therefore, the price that the retailer chooses to sell the product at to consumers does not change how much the manufacturer makes (except indirectly, by affecting quantity sold and therefore bought from the manufacturer). Coca Cola gets the same amount of money per can if Walmart sells the cans for 20 cents each or $2 each.
In this case, Amazon essentially gets to choose not only the retail price, but the wholesale price, except that the prices are at a fixed ratio to one another and there is a price floor on the wholesale price based on the suggested retail price you gave.
Wal-mart is a bad example to use here. They actually tell companies what they are willing to pay; and everyone falls in line. Thats why some products you buy at WalMart aren't as good a quality as they are at other places. Companies make cheaper products to meet the demands of walmart.
This is quite different because in retail the wholesale cost is negotiated between the manufacturer and retailer. Therefore, the price that the retailer chooses to sell the product at to consumers does not change how much the manufacturer makes (except indirectly, by affecting quantity sold and therefore bought from the manufacturer). Coca Cola gets the same amount of money per can if Walmart sells the cans for 20 cents each or $2 each.
In this case, Amazon essentially gets to choose not only the retail price, but the wholesale price, except that the prices are at a fixed ratio to one another and there is a price floor on the wholesale price based on the suggested retail price you gave.