What is a Manufacturer Suggested Retail Price (MSRP)

The Manufacturer Suggested Retail Price (MSRP), is the price at which the manufacturer suggests that the retailer should sell an item for. It was created to try and stabilize pricing of items, especially brand names, across stores.

What shoppers don’t know is that the Manufacturer Suggested Retail Price isn’t always based on hard numbers or any formula per se there is no standardization as to how a manufacturer should calculate the MSRP of an item and in many cases is based upon what the manufacturer thinks you will pay. Case in point, designer t-shirt. The process and materials used to make designer t-shirts are pretty much the same as the process and materials used to make your Hanes brand t-shirt. In fact, many designer labels purchase their t-shirts wholesale from American Apparel. Yet, the MSRP might be $50+ on the designer’s shirt, and a store might sell it for even more. Why? Because you will pay more for the designer label.

The bottom line is that something is only worth what you, the shopper and your fellow shoppers, are willing to pay for it, not what the manufacturer or store’s pricing says. I know it’s hard to think of you,the consumer being in control of pricing, but in a market driven society, you are in the drivers seat. However, if the price becomes too low (hello Saks Fifth Avenue), it won’t be profitable for the seller of the goods to sell/make the item. So the key is to find a balance between scoring the deal and keeping businesses alive.