MSRP is the abbreviation of Manufacturer Suggested Retail Price that is the suggested price by manufacturers of goods for their products. MSRP is also referred to as list price and is a term commonly used by the automobile industry.
The suggested price of manufacturers is utilized by retailers and consumers alike.
Any good or commodity may be given an MSRP by its manufacturer, but it is more common in the cars, electronics, appliances and other commodities that have high prices. It is a price set by the good’s manufacturer, and it cannot change regardless of the retailer or store.
The MSRP in most cases reflects the amount or cost of the production and selling of the commodity and the mark-up of its sellers. The MSRP is provided so that those who are involved in selling the good (retailer, wholesaler and manufacturer) will also gain some profits from the sale of the product.
Retailers also use the MSRP to determine whether it is profitable for them to sell the items. If they find that the MSRP is way low, and then they can refuse to sell the items since selling the good is not a profitable venture for them.
Usage of MSRP
The cost of manufacturing and selling a commodity varies and as such there are some retailers that do not strictly follow the MSRP.
Consumers can use the MSRP to determine whether a particular reseller has overpriced the commodity or not since the MSRP is easily known. The manufacturers of goods provide the minimum selling price, and this means that sellers should not go below the minimum selling price. Setting of a minimum selling price is often done for products that are selling like hotcakes or for goods that are positioned to be exclusive goods.
Sometimes a retailer may go beyond the MSRP if it has incurred additional cost for selling it like shipping costs.