The MSRP is the suggested price for a vehicle sale. MSRP is an acronym that means the Manufacturer’s suggested retail price, it is also known as other names such as sticker price, list price, asking price and so on. On the side window of the vehicle you are assessing for purchase, there is an information sheet that the MSRP is posted on. Briefly, the MSRP is the amount or selling price the vehicle manufacturer proposes that the dealer sells the vehicle for.
What is a Monroney Label or Window Sticker?
You might have noticed a large sticker on the side window of every new car at the dealership. This isn’t just for decoration—it’s officially called the Monroney label (or the window sticker). Named after Senator Almer “Mike” Monroney, who championed the federal law requiring it, the Monroney label lists all the vital details about the vehicle. It shows you information like the MSRP, standard features, optional equipment, fuel economy ratings from the EPA, and even the vehicle’s place of assembly. This label ensures every buyer has the same information and can compare vehicles easily—whether you’re shopping in Manhattan or out in Montauk.
What’s Not Included in the MSRP?
While the MSRP is prominently displayed on the vehicle’s window, it’s important to know what’s not part of that number. The MSRP only covers the manufacturer’s suggested price for the vehicle itself, and there are several additional expenses you’ll encounter at the dealership that are not included in this figure.
For example, you’ll still need to budget for:
- Sales tax and other state or local taxes
- Title, registration, and license plate fees
- Documentation fees (which may be capped differently depending on your state)
- Extra dealership charges, such as prep fees, advertising fees, or market adjustments
- Add-ons or accessories the dealer installs—think fabric protection, VIN etching, wheel locks, paint protection, or floor mats
- Delivery or destination fees
- Optional extended warranties or service packages
- Any dealer promotions or special sales pricing
These items can add up quickly and vary from one dealership to another. Taxes and certain government fees are generally consistent in your area, but things like dealer add-ons or prep fees can differ widely. Always ask for a detailed breakdown of any additional costs and be sure to confirm which fees are negotiable and which are required.
Does the MSRP include the destination charge?
The MSRP does not account for the destination charge. This fee—sometimes called the delivery or freight charge—covers the cost of transporting the vehicle from the manufacturer to the dealership, and is usually listed separately on the vehicle’s information sheet. Even if you arrange to pick up the car from the factory, this charge typically applies and is generally not negotiable. When calculating your total out-the-door price, be sure to factor in this additional cost along with the MSRP.
Does the MSRP include tax?
The MSRP does not include tax. This amount represents only the vehicle’s retail price set by the manufacturer, before any taxes are applied. While you might spot a breakdown of extra costs—including state or local taxes—on the same window sticker, the MSRP itself does not account for these additional charges. Be prepared to factor in sales tax and other fees when calculating your total purchase price.
The price suggested is not the fixed price for which the vehicle must sell. In this article, MSRP will be broken down below, and we will explain what it means and how you should apply it to the purchase of your vehicle. You can ask one of the dealership’s sales consultants for the MSRP of the vehicle you are considering, if you can not find it on your own.
How is MSRP determined?
If you are not experienced in the auto industry, it is uncommon knowledge that there is a federal law that instructs dealerships to show the MSRP of every vehicle they have on sale. This requirement comes from the Automobile Information Disclosure Act of 1958, which mandates that certain information—including the MSRP—must be disclosed at the time of sale for most new passenger vehicles. As a result, every new car on a dealer’s lot displays a window sticker, often called the Monroney label (named for Senator Almer Stillwell “Mike” Monroney, who sponsored the act). These stickers provide buyers with crucial information, not just about the MSRP, but also about fuel efficiency ratings and other key vehicle details.
This law ensures transparency and helps you, the consumer, compare models and pricing without confusion, leveling the playing field whether you’re a seasoned car buyer or making your first big purchase. The MSRP is determined based on the components used during the making of the vehicle. Some dealerships display the MSRP for the vehicle’s make while including different options for the model’s midrange as it ranges from the basic to the most expensive trims. The most expensive trims are more expensive because they include more niceties, tech, and interiors. All these changes and adjustments are things that can lead to the dealership adding more money. It is highly intriguing and important to note that other retail products aside from cars also have MSRPs though there is not a federal law that demands retailers display those MSRPs as is the case with automobiles for customers when Car Shopping. Let’s take a closer look at an example of MSRP to help explain what this acronym means and why it is so important when it comes to car sales. Let’s say there is a situation in which you and your friends go car shopping and find a stunning new luxury Benz with an MSRP of $75,000. The auto dealer then prices the vehicle at $85,500. The MSRP is sometimes lower than the manufacturer’s suggested sales price so you might feel as though you are overpaying for the vehicle. Most dealerships will not bring the sale price of the vehicle down to the suggested retail price of $75,000, but negotiating the price to a favorable amount close to the MSRP or below is advisable.
MSRP vs. Base Price: What’s the Real Difference?
When you’re shopping for a new vehicle, you’ll likely encounter both the “base price” and the “MSRP.” But what sets them apart? The base price is simply the cost of the vehicle in its most stripped-down version—no bells, no whistles, just the standard equipment that comes at that trim level. It’s the starting point, kind of like ordering a plain bagel before you add your favorite schmear.
The MSRP, or Manufacturer’s Suggested Retail Price, goes a step further. It takes the base price and then layers in any optional equipment or features that the manufacturer installed before the car even reached the dealership—think upgraded sound systems, heated seats, or panoramic sunroofs. The sum of the base price and these factory-installed options creates the MSRP you’ll see displayed on the window sticker.
Trim levels play a role here, too. A “base” trim comes with the absolute essentials, while higher trims add more luxury or tech—each with their own base price. Regardless of trim, the MSRP reflects the total of the standard equipment plus any factory add-ons chosen for that specific vehicle.
So, when you see those numbers, remember: the base price is just the beginning, while the MSRP shows you the complete manufacturer package before dealer markups or negotiation begin.
Let’s go through the difference between dealer cost, factory invoice price, and Manufacturer’s suggested retail price.
MSRP and dealer invoice price are not similar or related to each other. The amount that a dealership pays to the manufacturer of the vehicle on a receipt is the invoice price. For example, if a vehicle is worth $35,000 at MSRP, the amount on the invoice price would likely be about $33,000. This simply means that the car dealer paid less to obtain the vehicle. Other factors that determine how expensive the car is are the expensive features added to the car, the more added or customized features, the larger the difference between the invoice price, MSRP, and the selling price. It is also important to know that the invoice price might not be the sum total of what was paid to the manufacturer.
How much below MSRP is a good deal?
For the bulk of the car-buying populace, if you can grab a new vehicle for less than the MSRP disclosed on the side window, you are getting a fair deal. To be honest, most auto dealerships are opposed to selling their vehicles for less than the MSRP. A lot of auto industry experts will insist that buying a vehicle at or close to the MSRP is the best deal you can get, but now you know better.
Can vendors sell a vehicle over MSRP?
Yes, they can, selling a vehicle over the MSRP is coming to be increasingly common as supply decreases and demand increases. factors such as computer chip shortages, increased demand, a limited number of that particular model, fuel scarcity, inflation, and all, have the potential to increase the sale price that much higher than the MSRP.
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