What Does MSRP Mean?

August 30th, 2019 by


What Does MSRP Mean?

Car dealership commercials…*sigh*. Let’s be real honest for a second: have you ever seen a dealership commercial that you actually enjoyed? We think we know the answer to that. They’re often loud, kinda of cheesy, and always throw dealership terms around as if everyone knows what they stand for. The biggest offender? “MSRP.” After all, it wouldn’t be a car dealership commercial if you didn’t hear that acronym at least 53 times, am I right?

So we want to make it simple and easy to understand by letting you in on a little secret: not only is it helpful to know what MSRP means, but it’s also helpful to know what “base price” and “invoice price” are as well. Let’s break it down, shall we?

MSRP: Manufacturer’s Suggested Retail Price

MSRP simply stands for Manufacturer’s Suggested Retail Price. In other words, when you’re told what the MSRP price of a vehicle is, that means the vehicle’s manufacturer is suggesting the vehicle be sold at that price. Now, something else you should know is that while dealer’s are allowed to sell the vehicle at below MSRP, they’re also allowed to sell the vehicle above MSRP–it’s all dependent on the circumstances.

For example, if there is an overflow of a particular model that needs to be moved off the lot, a dealer will likely offer those vehicles at below MSRP. On the flip side, if a new model comes out and is performing extremely well, they’ll likely be sold at slightly above MSRP due to the simple supply and demand rule.

What Is Invoice Price?

The invoice price is pretty simple: it’s the amount of money the dealership paid the manufacturer for the vehicle. Now, as mentioned above, the MSRP leaves some room for negotiation depending on the circumstances (demand of that particular model, inventory, etc.), but you likely won’t find much wiggle room when it comes to getting a “below invoice” price because that requires the dealership to sell the car at a loss. If a cookie cost you $1.00 to make, you wouldn’t sell it for $.75, right?

What Is Base Price?

Lastly, the base price of a vehicle is the price of a vehicle with no additional “add ons” or special trim levels.

We hope this information helped clarify any questions you have about common car lingo you hear, and if you have any additional questions, feel free to drop them in the comments below! For more information on the vehicles we offer, visit frankletahonda.com.