Another term for manufacturer's suggested retail price (MSRP) or list price – the recommended selling price for a vehicle and each of its optional accessories as defined by the manufacturer.
When looking at the sticker price on a car, you are looking at the manufacturer’s suggested retail price, and the suggested price of the dealer-installed options. These are used to come up with the sales price of the car.
MSRP is also known as the Monroney sticker price. The sticker itself includes four components:
1. The base price of the vehicle.
2. The cost of the manufacturer’s installed options.
3. The manufacturer’s transportation charge of getting the vehicle to the dealer.
4. The fuel economy information for the car.
Another component of the sticker price actually comes from the dealership. These are the fees added by the dealer. Some of the dealer charges are for services or upgrades to the car. For example, if you want rust-proofing, there is a dealer charge for that. Other similar charges include undercoating or sometimes even a cost for a specific paint color. These should be itemized on the sticker price so that you see the specific cost for each. A transportation fee is also standard in the industry, and it covers the cost of transporting the car to the dealer.
Other charges added to the sticker price are less specific and should be scrutinized by potential buyers. For example, there is often a fee titled additional dealer markup (ADM) or additional dealer profit (ADP). This is merely a catch-all fee meant to increase the profit that the dealer makes on the car. It is certainly negotiable.
Another fee that sometimes appears on the sticker price is an advertising fee. This is the dealer trying to pass on to the consumer the dealer’s advertising costs. If you do not feel that you should be paying this business expense, tell the salesperson that you want that fee removed, or at least greatly reduced. Another nebulous fee is the dealer prep fee. This is the cost to the dealer to get the car ready for you. Since it does not usually entail much more than removing plastic film from the car’s interior, it does not warrant an expensive fee.
Understanding how the dealer comes up with the sticker price can help you in a potential car purchase. You can see how much the dealer has added to the price after the MSRP and decide if you are willing to spend that amount or need to keep shopping.