Difference Between MSRP and Invoice
If you want to buy a car, you go to the dealer and ask about the prices. You see the sticker price popularly known as MSRP. It hangs inside a new car. This price is suggested by the manufacturer of the car. The dealer displays to the customer. But there is lower price too. It is known as invoice. Most of the customers do not know what an invoice is. They bargain on MSRP. They are sure to pay more than what they should or what the invoice suggests.
A dealer never tells the customers about the invoice. He introduces to the MSRP. Invoice is the price the dealer has to pay to the manufacturer of the car. The invoice price is much less than the MSRP. And even after a bargain, the dealer earns a lot. It happens due to the two reasons. First the customers have no knowledge about the invoice and second, the brand of car is popular. As generally car do not show the invoice to the buyers, it is easy to know it as the entire car manufacturer shows them on their websites. Therefore, before buying a car one should have the knowledge of the invoice of the car.
Car manufacturer always give another concession to the car dealer known as holdback which is 2 or 3 percent of the total price of the car. It is given as an incentive. If the buyer knows about this benefit, he can do more bargains with the dealer and purchase a car in lesser price. There are other expenses to be borne. If a dealer is selling a car at invoice price, it does not mean that he is selling the car at par. He earns profit even then. It depends upon the car price that how much a dealer earns by selling a car to you. However, no car dealer sells a car at invoice price. But the customer should bargain as far as possible.