What Is MSRP?

2014 Ford Focus Electric window sticker showing lower price

When buying a new vehicle, consumers are confronted with a number of different terms, not all of which are immediately transparent. One of these is MSRP. But what does that stand for? MSRP is an acronym that stands for the Manufacturer’s Suggested Retail Price. This is the selling price that the manufacturer recommends for its products. It is also called the Monroney price, sticker price or list price.

The MSRP includes a car’s standard equipment plus any factory-installed options. The MSRP is listed on a sticker which is affixed to the car’s windshield. The MSRP also includes any dealer-installed options, prep fees and markup.

The key point to remember is that the MSRP is only a suggested price for the new car, truck, crossover, SUV or minivan. The automobile manufacturer cannot set the price that dealers sell vehicles for. They can only suggest such prices.

The MSRP is different from the dealer invoice price, which is what the dealer actually pays the manufacturer for the vehicle. Invoice price may also reflect a discount to the dealer from the manufacturer to help the dealer sell the car, depending on how popular the car is and on the supply and demand for that particular vehicle.

If the MSRP is only suggested, and the invoice price is what the dealer pays, where does that leave the consumer? The answer, according to car buying experts, is somewhere in between. You never want to pay the MSRP and you probably won’t be getting away paying invoice price. Starting from invoice price and negotiating down, taking into consideration what cars like this are selling for in the market, is the better way to go.

Sites such as Kelley Blue Book and Edmunds offer Fair Market Range and True Market Value pricing, respectively, to help you figure out a specific, realistic amount you can use when negotiating the price of a car.


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