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What Is the Suggested Retail Price?

Manufacturer's often suggest a retail price.
Manufacturers suggest the retail, or list, price for goods.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 03 October 2014
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The suggested retail price, or SRP, is the selling price that the manufacturer recommends that the seller or retailer receive for the goods or services. Sometimes referred to as a recommended retail price or RRP, this type of retail price can help to normalize the prices charged by different retailers in a community for the same product. Different retailers utilize this price recommendation in different ways, often as a strategy that helps move the business closer to its financial goals.

It is important to note that the suggested retail price leaves a great deal of room for competition among different businesses. Retailers may price their goods for some amount that is not only less than the suggested price, but also slightly less than the prices posted by other stores in the immediate area. This lower price may be an everyday retail price, or be a discounted special price that is only available for a short period of time.

One common approach used by retailers is to publish the manufacturer’s suggested retail price for all consumers to see. Along with this price, the retailer will also publish a purchase price that is lower than the cost recommended by the manufacturer. This approach creates the illusion that the consumer is getting a good deal on the purchase, although the purchase price is usually set high enough to still allow the retailer to earn a significant profit off each unit sold.

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Automobile dealers often employ this same approach to the suggested retail price. In many countries, regulations demand that dealers display the manufacturer price with each vehicle offered for sale. Dealers use this to their advantage by contrasting this suggested price with a lower price, which in turn conveys the impression that the vehicle is a bargain. When running a sale to clear out inventory that is not moving, some dealers will display three prices on selected vehicles: the suggested retail price, the usual discounted sticker price, and sales price that is available for a short time only. This strategy serves to further identify the vehicle as true bargain, and is likely to attract consumers who would not consider purchasing the automobile otherwise.

There are different terms used to describe the suggested retail price in various settings. This price is sometimes referred to as a rack rate when referring to pricing for telecommunication services, or when booking a trip through a travel agency. The term implies that the average going rate charged for the product is what most other providers would charge, but that it is possible to receive a discounted rate with a particular provider. With telecommunication services, smaller competitors often use the published price structures of major players in the industry as the rack rates, then offer potential customers pricing that is significantly less than those purported industry averages.

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cupcake15
Post 4

@BrickBack - I have to say that jewelry stores use the same tactic. They have unusually high jewelry prices and then claim that they will discount them by 70%. The same could be said for mattresses. I went to a mattress store the other day and the retail price of the mattress was $2399. I liked the mattress but told the sales person that I was not going to pay that much for the mattress.

He then negotiated the price with me and I got the mattress for $1199 with a free bed frame frame along with free shipping. Mattress stores do negotiate with their customers but not everyone knows that.

However, there are some brands that do not allow them to negotiate. Brands like Tempur-Pedic have a set price, but the store can usually throw in some pillows or offer you free delivery.

You can get a great deal on a mattress if you do your research and be firm on your stance that you are looking for the best deal. Mattresses have a high markup and are among the products with the highest gross margin of any product sold in department stores.

BrickBack
Post 3

@Latte31 - I think that the more information that you have on the car the better negotiating position you put yourself in. Some of the sites on the web make it sound that you are getting a wholesale price, but it may not be so you have to be aware.

A site like RV Direct allows you to select the RV of your choice as long as you provide a price that you would like to pay. The dealer then prepares the quote and sends it to you. Some people have been happy with the service but I still think that it is best to physically go to the dealer and inspect the RV and get a lot of quotes before settling down.

Many of these dealerships all claim to offer the lowest manufacturers suggested retail price msrp, but you will have to find out for yourself who is telling the truth.

latte31
Post 2

@Cafe41- I agree with you. There are so many places to obtain information on what a car is really worth. For example, the Edmunds and Consumer Reports sites publish valuable information regarding car prices and features. They also offer opinions on the best values.

It is best to do your research before buying a car by submiting online queries to multiple dealers. Once you have narrowed down your selection you are bound to get a better deal.

It is really important when looking at a car's retail price that you focus on the price of the car and not the car payment because the dealers will charge you hidden financing fees and raise the interest rate in order to gain the profit that they are looking for.

It is best to negotiate the total price of the car first and then work on the car payment. Going to the dealership with an Edmunds printout could also help the dealer know that you did your homework. That is what I do and I usually get a great deal.

cafe41
Post 1

The manufacturer's suggested retail price msrp is usually the price listed for car.

The car retail price is on the window of most cars. It details the price of each feature along with the total sticker price.

Most people understand that this price is negotiable. The full sticker price is usually never paid on a car.

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