MSRP stands for manufacturer's suggested retail price. It is a price the manufacturer recommends for retail sale. The word suggested is the key to the definition: MSRP is not the same thing as a merchant's actual selling price, wholesale cost, compare-at price, or minimum advertised price (MAP).
MSRPWhat is MSRP? A manufacturer's suggested price, not the merchant's actual selling price
In the United States, the FTC's competition guidance explains that a manufacturer may suggest a retail price and, subject to applicable law and distribution arrangements, dealers generally remain free to set their own retail prices. The same guidance also notes that federal and state/international rules can differ. MSRP is therefore a reference from the manufacturer, not proof of what a particular store charged or what every store must charge.
The 4 prices that are easy to confuse
Consider a product with these values:
- wholesale cost to merchant: $55
- MSRP: $100
- merchant current selling price: $88
- merchant compare-at price shown: $100
Each number has a different role.
MSRP is one price reference among several
- MSRP
- $100Suggested price
- MAP policy
- Advertising floorSeparate from MSRP
- Wholesale cost
- $55What it pays
- Selling price
- $88What it charges today
- Compare-at price shown
- $100Needs its own provenance, truthful and lawful
- Sees
- $88 selling priceNot the MSRP, not the wholesale cost
Wholesale cost
What the merchant pays its supplier under the relevant purchase terms. It is an input to product economics.
MSRP
The manufacturer-suggested retail price. It originates upstream from the manufacturer/brand.
Selling price
What the merchant currently asks the customer to pay.
Compare-at/reference price
The amount presented beside the selling price to communicate a comparison or savings claim. It must have a truthful basis under applicable law. The fact that MSRP and compare-at price are both $100 in this example does not make the concepts identical.
MSRP versus MAP
MSRP suggests a retail selling price. MAP concerns the minimum price a reseller may advertise under a manufacturer/supplier policy. MAP does not necessarily dictate the final transaction price, and the enforceability/operation of manufacturer pricing policies depends on jurisdiction and the actual arrangement. The FTC's U.S. competition guidance distinguishes suggested prices from manufacturer-imposed pricing policies and warns that legal treatment can vary.
For an ecommerce catalog, do not store MSRP and MAP in the same field merely because both arrive from a supplier.
MSRP versus compare-at price
A merchant may display MSRP as a reference in some contexts, but 2 questions remain:
- Is the label clear that this is a manufacturer's suggested price rather than the merchant's own former price?
- Is using that MSRP as a savings comparison truthful in the relevant market?
Current FTC deceptive-pricing guidance warns that a suggested/list price comparison can be misleading when the suggested price does not correspond to prices at which substantial sales are actually made in the relevant trade area, and it emphasizes good-faith use rather than fictitious reference prices. So "MSRP $100, our price $70" is not automatically safe merely because a supplier printed $100 in a catalog.
Why manufacturers publish MSRP
MSRP can serve several commercial purposes:
- provide a consistent market reference for a product launch
- communicate brand positioning
- help retailers understand the intended price tier
- simplify catalog/channel planning
- create a reference point across multiple resellers
But a suggestion cannot guarantee the market will support the number. Retailers can face different costs, competition, taxes, currencies, and customer demand.
MSRP can become stale
A manufacturer's suggested price can outlive the market conditions that produced it. Currency changes, product age, new models, channel discounting, and persistent market prices can make an old MSRP poor context for a current savings claim. That is why MSRP should carry provenance:
- manufacturer/source
- effective date or version where available
- market/currency
- product/variant
- whether it is still current
A bare number without provenance is difficult to defend or maintain.
Global catalogs need market-specific thinking
A product can have different official suggested prices by country because of currency, taxes, channel strategy, or regional product configuration. Converting a U.S. MSRP mechanically into euros or Singapore dollars does not necessarily create the manufacturer's official MSRP for those markets.
If the supplier publishes market-specific price lists, store the actual market-specific reference rather than fabricating one through FX conversion and labeling it MSRP.
MSRP and discount claims
A crossed-out MSRP can visually resemble a former-price sale. That creates a communication risk. Compare: Was $100, now $80 versus: MSRP $100, our price $80 The first sounds like the merchant's own price history. The second identifies an external reference. Depending on jurisdiction and market reality, either can still require substantiation, but they are not the same claim. The UI should not erase that distinction for visual simplicity.
When MSRP is operationally useful
MSRP can help:
- seed an initial pricing review
- compare current price to manufacturer positioning
- identify unusually deep channel discounts
- validate feed/catalog data
- analyze price dispersion across resellers
- provide a labeled reference where truthful and permitted
It should not replace a merchant's own unit-economics calculation.
Data-model recommendation
For systems that need these concepts, separate fields are safer than overloading one:
costselling_pricemanufacturer_suggested_pricecompare_at/reference_pricemap_policy_priceif relevant- provenance/effective dates
This lets the storefront decide what can be displayed without losing the underlying meaning.
Worked example
A product has:
- merchant cost = $60
- MSRP = $100
- If the merchant sells at MSRP:
- gross profit = $40
- gross margin = 40%
- markup = 66.7%
If the merchant sells at $90:
- gross profit = $30
- gross margin = 33.3%
- markup = 50%
MSRP did not determine either ratio. It was simply the manufacturer's suggested retail reference. The merchant's own cost and actual selling price determine the product economics.
Common mistakes
- It is a manufacturer suggestion by definition; actual legal/contractual constraints require separate analysis
- Wholesale cost is what the retailer pays; MSRP is a consumer-facing suggested price
- The merchant may never have sold or offered the item at MSRP
- MAP concerns advertised-price policy; MSRP suggests a retail price
- Suggested-price comparisons can become deceptive when the reference lacks a real market basis
Questions we get asked
Is MSRP the same as RRP?
They are closely related concepts. RRP usually means recommended retail price, while MSRP explicitly refers to a manufacturer-suggested retail price. Terminology varies by market.
Do retailers have to sell at MSRP?
Not universally. In the U.S., FTC guidance says dealers generally may set their own retail prices, while manufacturer policies, contracts, state law, and other jurisdictions can change the analysis.
Can I show MSRP as a compare-at price?
Potentially, if the presentation accurately identifies the reference and complies with applicable pricing/advertising rules. Do not imply it was your own former price if it was not.
Is MSRP useful for calculating margin?
Only if you actually sell at that price. Margin should be calculated from the relevant realized/current selling revenue and product cost, not from a suggested price that the customer did not pay.
OnVoard's take
MSRP is best treated as metadata with provenance, not as "the real price." Keep it separate from selling price, MAP, cost, and compare-at history. That separation protects both analytics and customer-facing claims when a suggested number differs from what the market actually does.
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