Science Fair Project Encyclopedia
MSRP stand for "Manufacture's Suggested Retail Price".
Under earlier U.S. state "Fair Trade" statutes, the manufacture was able to impose a fixed price for items. These fixed prices could offer some price protection to small merchants in competition against larger retail organizations. These were determined to be in restraint of free trade. However some manufactures have adapted MSRP - a price at which the item is expected to sell. This may be unrealistically high, which opens the market to "deep discounters", able to sell products substantially below the MSRP. Recent trends have been for manufactures to set the MSRP closer to the "street price" — the price at which items actually sell in a free market.
A common use is due to statutory requirements regarding automobile sales in the United States. Prior to this there were no defined prices, and dealers were able to impose arbitrary markups, often with prices adjusted to what the salesperson thought that the prospective purchaser would be willing to pay. Currently "sticker price" includes a substantial markup so high that dealers will often be willing to reduce this margin, while for new and popular cars the dealers will often impose additional charges for high margin dealer items such as interior floor mats, striping, and the like and even sometimes "dealer preparation". Regardless of these up and down adjustments, MSRP gives the consumer a starting point for negotiation.
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