Buying a car isn’t quite like buying a jar of peanut butter at the grocery store. Most everyday items have a set price, and what you see on the sticker is what you pay. This isn’t the case with cars. Every car has an MSRP which serves as a starting point for what you end up paying. Unlike that jar of peanut butter, you might be able to pay less, or in some cases have to pay more. Why is that, and what is an MSRP? Here’s the breakdown.
What’s the Meaning of the Term MSRP?
MSRP is an acronym for manufacturer’s suggested retail price. It represents the price that a manufacturer recommends a vehicle be sold for. That price is set in a way that generates profit for the manufacturer, dealer, and various intermediaries. However, as the term MSRP implies, it’s only a recommendation—actual sale prices can be lower or higher.
What Does MSRP Include?
A car’s MSRP includes the base price for its particular trim level, as well as the prices of any options, packages, or extras it’s equipped with. Features are typically itemized and listed out, noting whether they’re included or additional cost. Standard factory warranty and service coverage is included in that price. MSRP does not include any accessories or extended service programs sold by the dealer, nor does it usually include sales or incentives. Various fees and taxes are also not part of the MSRP—it pertains primarily to the specific vehicle.
Does MSRP Include Destination Charge?
The MSRP also typically includes the destination fee, which is the charge levied for transporting the vehicle to a dealership. Destination fees cover costs related to preparing the vehicle for transportation at the factory, labor and fuel for transporting it, and getting it ready for the customer to take home.
Is Sticker Price Different Than MSRP?
“Sticker price” and “window price” are different ways of referring to MSRP. All these terms mean the same thing. MSRP is often called sticker price or window price because of the paper sheet with MSRP information stuck to a car’s window detailing the MSRP stuck to a car’s window. Industry insiders refer to this sheet as the Monroney, which is named after the U.S. senator who sponsored the law requiring car manufacturers to disclose a vehicle’s features and associated pricing.
MSRP vs. Invoice: What’s the Difference?
Exactly who is the MSRP suggested for? It ain’t the dealer—it would be you, dear car shopper. MSRP is the price often initially presented to you, because it includes some amount of profit margin for the dealer. So what does the dealer pay? That would be the invoice price, which is the amount a manufacturer charges a dealer. It often includes charges to cover costs the manufacturer pays, like such as advertising. The dealer may be reluctant to show you the invoice, and even more reluctant to go below invoice on the sale. Both are possible, though. A dealer may be willing to sell a car below invoice depending on what perks and kickbacks are available to them, but that’d be a lucky strike.
Can I Negotiate Off MSRP for a Car?
Remember, MSRP is only a suggestion. It’s in your interest to make a suggestion back, and negotiate down the price of the car. In general, the more expensive it is, the more room there is for negotiation. Look around the dealership and see how many similar vehicles are there. Many Lots could indicate a surplus, while few might mean that model is in demand. It’s also smart to get offers from a few dealerships. You can use those figures as leverage between them. If you’re cool with a car from a previous model year, there might be more space for negotiation, given availability. Try to get an idea of the dealer’s invoice price, and use it as a reasonable starting point for your offer. It’s OK to be firm, but don’t forget that the dealer is there to make money—there’s only so low they’ll be willing to go.
Why Pay Over MSRP?
Want that super-cool new car, truck, or SUV that’s finally available? Be prepared to pay over MSRP. Dealers know when a vehicle is in demand, and have every right to mark up its price. That’s commonly referred to as “market adjusted value,” which indicates the vehicle’s popularity and desirability. Vehicles that are high -performance, special -edition, limited -production, or brand spanking new are particularly subject to markups over MSRP. Markups often fade over time along with hype, but in the moment they represent a dealer trying to cash in on drivers eager to own the latest and greatest vehicles.
What’s the Highest and Lowest MSRP?
The spread between the low and high ends of car pricing might be wider than it’s ever been. There are a few subcompact cars that can be had for under $20,000, but there are more subcompact SUVs that start in the $20,000 range. At the other end of the spectrum are hypercars that run for well over $1,000,000. Then there are special versions of those hypercars that cost even more. The most expensive cars may remain the one-off customs that are made for the most discerning and wealthy clientele. When cost is no object, the results can be stunning. For everyone else, there are lots of options in between. But don’t forget to consider a car’s long-term ownership costs before you sign on the dotted line.
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