The MSRP, or Manufacturer’s Suggested Retail Price, is the amount car manufacturers recommend that car dealers use as the selling price for a vehicle. It is always higher than the dealer cost and it never varies from dealer to dealer.
The MSRP usually covers a car’s standard equipment and factory-installed options. However, it does not include dealer add-ons or any other fees that you may need to pay to acquire a car. To clarify – the MSRP concept applies to any purchasable product, so this is not something that dwells strictly in the automotive industry.
As the word "suggested" implies, this retail price is just a suggestion, which means that vendors are not obligated to use the number. As a result, many car dealers often lower the suggested price to entice more buyers, resulting in what some refer to as the “sticker price.”
The sticker price is what you would see on a sticker displayed on a car's window. The number on these stickers may or may not include discounts or other fees associated with the purchase. And since sticker prices are set by dealerships, they may vary from one location to another. Like the MSRP, this number is usually higher than the dealer cost, which means that there is room to negotiate, even if the number is far below the MSRP. Dealers can still profit from low sticker prices because manufacturers tend to offer them a fair compensation in return, like the Dealer Holdback or Dealer Cash Incentives.
Generally speaking, you never want to pay the MSRP, but you will also never get away with paying the dealer cost. Instead you will likely be stuck with something in-between, and that number is usually dictated by the market. The lower the demand, the less you will pay, and vice versa. If you want to find out the average price on the vehicle of your choice, simply configure it with our free tool right here.
For more information on how various incentives can affect the sticker price of a specific vehicle, be sure to consult Unhaggle’s free dealer cost report or contact our customer service team.