Manufacturer's Suggested Retail Price
The manufacturer’s suggested retail price (MSRP) is the price that a product's manufacturer recommends it be sold for at the point of sale. Any retail product can have an MSRP, but the term is frequently used with automobiles. An MSRP is sometimes informally known as the "sticker price."
The MSRP is also referred to as the list price by some retailers. Other higher-priced goods, such as appliances and electronics, may have an MSRP as well.
The MSRP is designed to keep prices at the same level from store to store. However, retailers are not required to use this price, and consumers do not always pay the MSRP when they make purchases. Items may be sold for a lower price so a company can reasonably move inventory off shelves, especially in a sluggish economy.
Manufacturer's Suggested Retail Price (MSRP)
Definition
The Manufacturer's Suggested Retail Price (MSRP) is the price recommended by the manufacturer for selling a product at the point of sale. Any retail product can have an MSRP, but this term is most commonly used for automobiles. MSRP is sometimes informally referred to as the 'sticker price' and is also called the 'list price' by some retailers.
Origin
The concept of MSRP originated in the mid-20th century, initially used in the automotive industry. As market competition intensified and consumer demand for price transparency increased, manufacturers began providing suggested retail prices to help standardize pricing strategies across different retailers.
Categories and Characteristics
MSRP can be categorized into the following types:
- Automobile MSRP: The most common type of MSRP, typically used in car sales to help consumers understand the standard price of a vehicle.
- Electronics MSRP: Used for appliances and electronics, such as TVs and refrigerators, providing a reference price.
- Other Goods MSRP: Includes other high-priced items like clothing and furniture, helping consumers compare prices across different stores.
Characteristics of MSRP include:
- Price Standardization: Helps keep prices consistent across different stores.
- Non-Mandatory: Retailers are not required to use this price, and consumers do not always pay the MSRP when purchasing.
- Market Adjustment: Products may be sold at lower prices to help companies clear inventory, especially during economic downturns.
Case Studies
Case 1: Automobile Sales
In automobile sales, the MSRP is often displayed on the car window as a reference price for consumers. For example, a new sedan might have an MSRP of $30,000, but due to market competition and promotional activities, the actual selling price could be lower.
Case 2: Electronics
In electronics sales, MSRP also plays a significant role. For instance, a new TV might have an MSRP of $1,500, but during Black Friday sales, retailers might sell it for $1,200.
Common Questions
1. Why is the MSRP different from the actual selling price?
MSRP is just a suggested price; retailers can adjust the price based on market demand and inventory levels.
2. Should consumers always pay the MSRP?
Not necessarily. Consumers can compare prices across different stores to find deals below the MSRP.
