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How is MSRP calculated?
What factors go into calculating MSRP? I see it all the time in stores and car dealerships and want to know what really goes into it.
Rachel Juillerat · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“This is a common question for a lot of us, so thanks for asking!
MSRP stands for Manufacturer’s Suggested Retail Price. MSRP is calculated based on how much it costs for a product to be:
- Manufactured
- Distribute
- Sold
MSRP is calculated so that manufacturers, distributors, and retailers still earn a profit for the product. This recommended price is also designed to appeal to consumers, so the price can’t be too high or consumers won’t purchase the product and manufacturers, distributors, and retailers won’t make money.
A lot of retails refer to the MSRP as the sticker price and you’ll hear these used interchangeably, especially at retailers where negotiating price is common practice, like at a car dealership. Car dealerships have room to negotiate because they can legally list a car above the MSRP.
That’s why whenever you’re on the market to
buy a new car
, you should always do your research and be prepared to negotiate price to help you save money. You can also save money on your car insurance, though you can’t negotiate rates. Instead, you can save money on car insurance by shopping around and comparing rates. The
Jerry
app makes comparison shopping easy by pulling quotes from the top providers and delivering the best deals to your phone in minutes for free.”View full answer
- Gregory R.
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