Manufacturer's Suggested Retail Price (MSRP)

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Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated September 30, 2020

What is Manufacturer's Suggested Retail Price (MSRP)?

A manufacturer's suggested retail price (MSRP) is a price that a product manufacturer tells retailers to charge for their products.

How Does Manufacturer's Suggested Retail Price (MSRP) Work?

Let's say Company XYZ manufactures the "Hot Stuff" line of men's clothing. Hot Stuff is a prestigious, exclusive brand sold only at high-end department stores. Company XYZ works very hard to support this high-end image for the brand, and discounting does not accomplish that goal. Accordingly, it requires its customers to sell its products at the MSRP, and to reinforce this it preprints prices on its tags before sending clothing to retailers. Company XYZ also does not allow retailers to mark Hot Stuff products down by more than 5% at any time.

Why Does Manufacturer's Suggested Retail Price (MSRP) Matter?

In many cases, MSRP is a suggestion from the manufacturer to the retailer. In other cases, as in our example, the MSRP is an important part of branding and relationships. However, most of the time, retailers willingly mark things down below MSRP in order to entice customers, gain a competitive advantage or get rid of old inventory.

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At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Manufacturer's Suggested Retail Price (MSRP).
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