What Is MSRP? Manufacturer's Suggested Retail Price for New Car Buying

Frequently asked questions

Is MSRP the final price?

Not usually. The final price of a vehicle is affected by its market value and what the dealership wants to charge for it. This means some vehicles will sell for less than MSRP, and at other times, dealers may hold the line at MSRP. The MSRP can be the starting point for negotiations, but if others are paying higher prices, it might be a time when paying the sticker price is acceptable. However, if the vehicle is in high demand — think of a brand-new or redesigned model — transactions well above MSRP are not uncommon. But keep in mind that MSRP is just one component of the final selling price, which also includes the destination fee, sales tax, registration, interest charges and more. This total is often called the "out-the-door price," which should be the actual final price.

How much off the MSRP can I negotiate?

The discount you get off MSRP will depend on the market value of the vehicle. You can expect to see larger discounts on slower-selling vehicles. But on a popular vehicle, even a couple of hundred dollars off might be considered a good discount. You can sometimes negotiate to buy a car at the invoice price, depending on market conditions. Occasionally, you can pay below invoice for a vehicle if there are incentives such as customer cash rebates or dealer cash. Dealer cash is unadvertised money the manufacturer pays the dealership to help it sell cars.

The dealer would like you to negotiate using the MSRP as the starting point. But the pro move is to use the dealer's asking price as the starting point because the dealership may have already discounted the vehicle from MSRP. Use the market value as your price target in the negotiations. If you can beat it, great! If you're at the market value or slightly above, at least you're in the ballpark for what others have paid.

Can a car dealership charge more than MSRP?

Yes. As you see when the MSRP acronym is spelled out, the figure is the suggested price, not the maximum price. Let's say there's a highly anticipated model coming out and the initial inventory will be limited. Some dealerships will use this as an opportunity to make an extra profit and add a "market adjustment" that raises the selling price of the vehicle. More commonly, you may come across a vehicle on the lot that has a number of dealer-installed options, such as wheel locks, all-weather floor mats and a cargo net. These items are bundled together and will raise the price of the vehicle. You'll find these extra dealer options itemized on a document adjacent to the window sticker called an "addendum" or "supplemental window sticker."

What is the "window sticker" on a car?

On any given new or used car, you'll find a piece of paper attached to the front or a side window with pricing listed on it. This label is referred to internally as the "Monroney sticker" or simply "the Monroney," but many people have taken to calling it the window sticker. The presentation of the window sticker can differ by automaker, but they all contain details about the vehicle's standard and optional features, plus the MSRP.

What is the "sticker price" of a car?

When people say "sticker price," they're usually referring to the total MSRP of the vehicle, with options, packages, destination charges, and other fees such as the gas guzzler tax (if applicable) or any manufacturer discounts. The sum of these costs is the sticker price, which may be labeled on the sticker as "Total vehicle price" or "Total price" or even "Total MSRP."

What is the destination charge on a car?

The destination charge covers the costs that an automaker incurs when transporting a new vehicle from the factory to the dealership. This cost is passed on to the customer and is part of the overall sticker price of the vehicle. It cannot be negotiated. The destination fee is one of many other fees that are part of buying a car. This article offers more detailed information about other fees you may come across and which might raise a red flag.

What is the invoice price?

Invoice price (sometimes referred to as "dealer cost") is the price that appears on the invoice the manufacturer sends to the dealer when the dealer receives a car from the factory. It is roughly what the dealership paid the automaker for the vehicle.

Knowing the invoice price is an important part of shopping for a new vehicle since it gives you an idea of the potential discount range, but it isn't the only number to focus on. There are more aspects to negotiating a car price than simply finding the invoice figure, so treat it as one of many tools at your disposal.

What is the market value price?

The market value price of a vehicle is the average figure that shoppers in a given area are paying for a vehicle. Edmunds calls this the Edmunds Suggested Price; it was previously called the True Market Value (TMV). The Edmunds Suggested Price is what we recommend you pay, not including taxes or fees. This market value is based on our analysis of millions of data points including supply, demand, incentives, options and recent nearby transactions.

For new cars, the market value will usually lie between the invoice price on the low end and the sticker price on the high end. For used cars, the market value is based on the average sales or trade-in price for comparable vehicles. Because the market value is an average, some people will pay less and others will pay more. But by looking at the TMV or the Edmunds Suggested Price, you can get a rough idea of how popular the vehicle is and what you should expect to pay for it. If you already have a quote from the dealership, use the Edmunds Price Checker to help determine if you're getting a good deal. And for those trading in a vehicle, use Edmunds' appraisal tool to help you determine its trade-in market value.

What is the Blue Book price?

When people mention the "Blue Book price," chances are they're using it as shorthand for the Kelley Blue Book (KBB) value. KBB is one of many resources that dealerships use to evaluate the pricing of a trade-in or used car. The market value of a vehicle gathered from KBB is often referred to as the "Blue Book price" or "Blue Book value." Like Edmunds, Kelley publishes its own used car values, using its own proprietary methods. Dealers will also consult NADAguides or the "Black Book," which are less consumer-oriented and are designed to help them determine wholesale prices.