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Manufacturer's Suggested Retail Price (MSRP)

What does the manufacturer's suggested price mean?

The manufacturer's suggested retail price (MSRP) or recommended retail price (RRP) is the price that a product manufacturer suggests to the retailer of the product. The term is also called the list price. An MSRP is often used as a starting point to standardize a product’s cost across multiple sales channels and gives resellers a better understanding of the valuation of an item. Recommended retail pricing is frequently inputted into local point of sale systems for easy recollection and storage of these price points.

On occasion, a retail store might sell a product for a lower price than the SRP, but typically this only happens if they’re promoting a sale price or discontinuing a certain SKU.

Frequently Asked Questions

  • Why is suggested retail price important?

    The suggested retail price is important because is helps keep fair prices among different selling channels or store locations. In general, the purpose of an SRP is to give manufacturers greater control over product prices, and to ensure items have competitive pricing for resale within the larger market. In addition, suggested retail prices prevent retailers from setting higher prices that can deter customers from purchasing with your company.

  • What is suggested list price vs retail price?

    In ecommerce, the list price and retail price have notable differences. A list price — also known as the manufacturer’s suggested retail price (MSRP) — is exactly that: a suggestion from the manufacturer to the retailer about the price to sell a product. Retail pricing, on the other hand, describes the sticker price of a product (that is, what the customer actually pays). While some stores always sell products at the SRP, others may markup or markdown as they see fit

  • How do you find the suggested retail price?

    As you begin to set prices for your retail products, it’s important to remember: (1) the SRP is not the minimum price you’re allowed to ask for, and (2) it’s not the true manufacturing or production cost for that item. That’s why it’s a good idea to do a bit of research about SRP or RRP pricing strategies, to make sure the profit margins benefit the reseller (and they continue ordering more stock from their distributor). Many times, the RRP pricing method is calculated by multiplying your wholesale price by either 2 or 2.5.

More terms and formulas

formulas Retail Price See definition and examples
Orders Return Merchandise Authorization (RMA) See definition and examples
Other Made To Stock See definition and examples

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