What Is A Dealer Sticker Price?
Dealer sticker price refers to the bottom-line price displayed on a vehicle’s window. Typically, it is the sum of the manufacturer’s suggested retail price (MSRP) and the price of additional features installed on the vehicle by the dealer.
The dealer sticker price is the price for which a dealership wishes to sell a car. The sticker price includes additional charges such as destination fee, preparation fee, and fees to install extra options beyond the manufacturer’s original offer.
Dealer sticker price and manufacturer’s suggested retail price are often erroneously believed to be synonymous by some customers, but they are not. The manufacturer’s suggested retail price (MSRP) is the price a manufacturer suggests that dealers should sell the car to customers. The manufacturer arrives at this price by considering various factors, including production cost. The MSRP serves as a guideline for dealers to base their asking price.
Since dealers are not mandated to sell a car at the MSRP and have the liberty to charge whatever they deem fit, taking into consideration how much it costs them to transport the car to their lot, among other things, they tend to raise the price. For instance, a dealer may increase the price of highly anticipated new cars due to excess demand.
However, because customers often refuse to pay above the MSRP, some manufacturers now include what is known as “dealer holdback” in the MSRP. The dealer holdback is a commission between 1% – 3% which a manufacturer would pay a dealer for each sale of a car. It is calculated into the MSRP to ensure that dealers would still make a profit even when customers refuse to buy at the dealer sticker price.
Dealer Sticker Price Example
The dealer sticker price is displayed on the window of a car to show how much the dealer wants for it. For instance, a sticker may list the MSRP of a car as $30,000, but add that the dealer wants $35,000 for it because they applied a stain-proofing product on the interior and upgraded the wheels to a premium one.« Back to Glossary Index