MSRP vs. Sticker Price

MSRP vs. Dealer Price

By Russell A. Simon


If you’ve ever shopped for a new car, then you probably already know the manufacturer’s suggested retail price (MSRP), or sticker price, can be quite different from the price you end up paying. Typically, there are two reasons for this:

1.          The price quoted in a car commercial often is the MSRP for the base model, and the dealer price can include options (factory and dealer-installed), fees, rebates, incentives and more.

2.          The car shown in a commercial usually is a top-of-the-line model and costs several thousand dollars more than the one you plan on buying.

Overall, it’s the second word in MSRP that is most significant – suggested. It means the manufacturer made a recommendation on how much a car should sell for; and like all recommendations, it can be accepted or rejected. Most dealers do use the MSRP as a baseline for pricing, then add options and fees to arrive at the dealer price.

One way to prepare for this difference is to read the fine print. Many car commercials show the line’s fanciest model, but quote the price for an entry-level car; then in the fine print it reads that the car shown actually costs thousands of dollars more. It may be slightly deceptive, a bit of bait-and-switch, but it’s not illegal. And this is what usually causes anxious car buyers to come down with a serious case of sticker shock.

So when it comes to buying a car, consider both the big and little things to come up with a ballpark idea of what you’re willing to spend. Large factors include items such as trim level; i.e., different options packages that make a more heavily optioned car more expensive. On the smaller side, keep in mind that something as simple as opting for a nicer stereo system can add hundreds to the final tally. And the finance rate you secure also can change your final purchase price by thousands.

But don’t be completely dismayed – keep in mind that things such as seasonal sales, model year-end closeouts, rebates and factory and dealer incentives can mean you’ll end up paying less than the MSRP.