MSRP: What Does It Mean?

The Manufacturer’s Suggested Retail Price  ( MSRP ), or manufacturer's suggested retail price also known as “sticker” price, is quite simply the price that the manufacturer suggests that the dealer should ask for a car. This is also referred to as the retail price, or the dollar amount that a retailer should be asking for the car according to the automaker. Think of it as the car-dealer version of the price tag you see on a television at an electronics store.

Although the MSRP is the suggested price, dealers have the freedom to ask more or less than this figure. If a car is in high demand, a dealer might include a market adjustment, which will increase the vehicle's price beyond the suggested price. The dealer can do this because they feel that the market demand is high enough to ask for more than the suggested price of the car.

MSRP is basically a recommended selling price that automakers give a new car. The MSRP is used by dealerships as a price to sell vehicles and is different from invoice price.
MSRP is basically a recommended selling price that automakers give a new car. The MSRP is used by dealerships as a price to sell vehicles and is different from invoice price.

Of course, dealers can also charge less than the suggested price for a car. In fact, the suggested price is typically a starting point for negotiations, and in many cases, customers insist on paying less than the MSRP. Dealers have the authority to make these changes to the car's final selling price because a suggested price is merely that -- a suggestion. It's ultimately up to dealers to decide whether they want to follow it.