To understand what is invoice price vs. MSRP you need to understand both terms in a separate way to then apply them to the new car buying process and learn how to negotiate the lowest price available.
What is Dealer Invoice price?
The dealer invoice price can also be known as factory invoice price. It is the bill the automaker gives to the dealership. The dealer invoice price should include all the charges that the dealer has to pay to the manufacturer, and in most cases it also includes the MSRP (manufacturer suggested retail price).
The invoice price includes:
- Base price of the vehicle
- Any additional options added by the manufacturer
- Delivery (destination) charges
- Advertising fees
Have in mind that the invoice price is not the true dealer cost that the new car dealership has paid for the vehicle. In the invoice price there are added costs such as the interests charged by the manufacturer for financing the car (“flooring charges”) as well as any other incentives.
What is the MSRP Manufacturer’s Suggested Retail Price or Sticker Price?
The MSRP is the vehicle’s retail selling price that is suggested to the dealer by the manufacturer. It is the ideal price that the manufacturer would like for the dealer to sell the car.
Pay the lowest amount possible for your new car by using your knowledge. With this information, you know the difference between prices and you can save thousands of dollars on your next vehicle!