The list price, also known as the manufacturer’s suggested retail price (MSRP), sticker price, or asking price, refers to the initial price that a manufacturer or seller recommends for the sale of a product in the market.
It is important to note that the list price is often just a starting point for price negotiations and doesn’t necessarily reflect the final selling price of the product. The actual selling price may be lower than the list price due to factors such as discounts, promotions, or negotiations between the buyer and seller. For example, when buying a car, the price you end up paying is often lower than the sticker price due to negotiations with the car dealer.
The list price can also serve as an anchor or reference point for consumers, helping them perceive the value of a product and assess the attractiveness of any discounts or sales. For example, if a product is listed at $100 but is on sale for $80, customers might perceive this as a good deal.
Example of the List Price
Let’s use an example involving a car dealership.
Suppose you are interested in buying a new car. You visit a dealership and find a model you like, let’s say a new ABC Sedan. On the windshield of the car, there’s a sticker with detailed information about the vehicle, including the manufacturer’s suggested retail price (MSRP) or list price, which is $30,000.
However, after speaking with the salesperson, you learn about various discounts and incentives currently available. There’s a $2,000 rebate available from the manufacturer, and the dealership is also offering a $1,000 discount as part of a special promotion. After applying these discounts, the actual price you will pay for the vehicle comes down to $27,000.
In this example, the list price of the vehicle was $30,000, but the final selling price, after discounts, was $27,000. The list price serves as a starting point for negotiations and lets you assess the value of the discounts offered. It is also the price you might compare with other dealerships to make sure you are getting a fair deal.