The manufacturer’s suggested retail price (MSRP), list price or recommended retail price (RRP) of a product is the price at which the manufacturer recommends that the retailer sell the product. The intention was to help to standardise prices among locations. While some stores always sell at, or below, the suggested retail price, others do so only when items are on sale or closeout/clearance.
Suggested pricing methods may conflict with competition theory, as they allow prices to be set higher than would otherwise be the case, potentially negatively affecting consumers. However, resale price maintenance goes further than this and is illegal in many regions.
Much of the time, stores charge less than the suggested retail price, depending upon the actual wholesale cost of each item, usually purchased in bulk from the manufacturer, or in smaller quantities through a distributor.
Suggested prices can also be manipulated to be unreasonably high, allowing retailers to use deceptive advertising by showing the excessive price and then their actual selling price, implying to customers that they are getting a bargain. Game shows have long made use of suggested retail prices both as a game element, in which the contestant must determine the retail price of an item, or in valuing their prizes.
Additionally, the use of MSRP and SRP (suggested retail price) have been confused. In certain supply chains, where a manufacturer sells to a wholesale distributor, and the distributor in turn sells to a reseller, the use of SRP is used to denote suggested reseller price. In that case MSRP is used to convey manufacturer suggested retail price.
Concepts similar to the MSRP exist in many countries, however, the equivalents of the MSRPs often cannot be compared directly internationally as products and services may differ in order to meet different legal requirements, and price figures communicated to consumers must include taxes and duties (for example) in the European Union, while they do not in the USA.
India does not use MSRP but instead has a maximum retail price.
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