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The ('''manufacturer's''') '''suggested retail price''' ('''MSRP''' or '''SRP'''), '''list price''' or '''recommended retail price''' ('''RRP''') (originally, ''[[Monroney sticker|Monroney]] suggested retail price'') of a [[product (business)|product]] is the [[price]] the [[manufacturer]] recommends that the [[retailer]] [[sell]] it for. The intention was to help to standardize 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]].
Suggested pricing methods may conflict with [[competition theory]], as it allows prices to be set higher than would otherwise be the case, potentially negatively impacting 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 [[manipulate]]d to be unreasonably high, allowing retailers to use [[deceptive advertising]] by showing the excessive price and then their actual selling price, implying to [[customer]]s that they are somehow getting a "[[discount]]" or a "great deal"{{fact|date=June 2007}}.
[[Game show]]s 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.
==MSRP in the United States==
Under earlier [[United States|U.S.]] state [[Fair Trade]] [[statute]]s, the [[manufacturer]] was able to impose a fixed price for items. These fixed prices could offer some [[price protection]] to small [[merchant]]s in competition against larger retail organizations. These were determined to be in [[restraint of trade|restraint of free trade]]. However, some manufacturers have adopted MSRP — a price at which the item is expected to sell. This may be unrealistically high, opening the market to "[[discount store|deep discounters]]" who are able to sell products substantially below the MSRP while still making a profit. Recent trends have been for manufactures to set the MSRP closer to the "street price" — the price at which items actually sell in a [[free market]].
===Automobiles===
A common use for MSRP can be seen in [[automobile]] sales in the [[United States]]. Prior to the spread of manufacturer's suggested retail pricing, there were no defined prices on vehicles and [[car dealer]]s were able to impose arbitrary [[markup (business)|markups]], often with prices adjusted to what the salesperson thought the prospective purchaser would be willing to pay for a particular vehicle.
Currently, the MSRP, or "sticker price" — the price of a vehicle as labeled by the manufacturer, is clearly labeled on the windows of all new vehicles. The actual price paid to the manufacturer by the dealer (and all rebates/incentives the manufacturer provides to the dealer) is becoming common knowledge. This information is becoming readily available via the internet. This information is helping consumers purchase vehicles with more ease, avoiding any need to shop from dealer to dealer, because the consumer is much more informed than ever before.
==Minimum advertised price==
'''Minimum advertised price''' (also known as [[resale price maintenance]]) is the practice of restricting pricing at the consumer level. [[Price fixing]] agreements are illegal in many countries when members and terms in the agreement match predefined legal criteria. Fixed pricing established between a distributor and seller or between two or more sellers violates [[antitrust]] laws in the [[United States]]. A minimum advertised price [[policy]] between a distributor and seller is acceptable as long as it is referring to the ''advertised'' price and not the ''selling'' price.{{Fact|date=February 2007}} This does not affect a single manufacturer setting the price on a "take it or leave it" basis.{{Fact|date=February 2007}}
== Rack rate ==
'''Rack rate''' is the [[travel industry]] term for the published full price of a hotel room, which the customer would pay if he or she walked into the hotel off the street and asked for a room. While lower than the maximum rate that the [[hotel]] may be allowed to charge under local laws, it is higher than the rate most travel agents can book for their customers. Sometimes the terms '''run of the house''' or '''walk-up rate''' are used to refer to the same highest rate. The term '''rack rate''' is also used by travel-related service providers, such as car rental companies or travel mobile phone rental companies, to refer to the same highest rate they would charge customers with no pre-bookings.
==External links==
* [http://www.ftc.gov/bc/compguide/illegal.htm FTC Illegal Business Practices]
* [http://www.ftc.gov/opa/2000/05/cdpres.htm Record Companies Settle FTC Charges of Restraining Competition in CD Music Market]
* [http://msl1.mit.edu/classes/esd123/vyas.pdf MSRP and a real value of a car]
Suggested pricing methods may conflict with [[competition theory]], as it allows prices to be set higher than would otherwise be the case, potentially negatively impacting 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 [[manipulate]]d to be unreasonably high, allowing retailers to use [[deceptive advertising]] by showing the excessive price and then their actual selling price, implying to [[customer]]s that they are somehow getting a "[[discount]]" or a "great deal"{{fact|date=June 2007}}.
[[Game show]]s 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.
==MSRP in the United States==
Under earlier [[United States|U.S.]] state [[Fair Trade]] [[statute]]s, the [[manufacturer]] was able to impose a fixed price for items. These fixed prices could offer some [[price protection]] to small [[merchant]]s in competition against larger retail organizations. These were determined to be in [[restraint of trade|restraint of free trade]]. However, some manufacturers have adopted MSRP — a price at which the item is expected to sell. This may be unrealistically high, opening the market to "[[discount store|deep discounters]]" who are able to sell products substantially below the MSRP while still making a profit. Recent trends have been for manufactures to set the MSRP closer to the "street price" — the price at which items actually sell in a [[free market]].
===Automobiles===
A common use for MSRP can be seen in [[automobile]] sales in the [[United States]]. Prior to the spread of manufacturer's suggested retail pricing, there were no defined prices on vehicles and [[car dealer]]s were able to impose arbitrary [[markup (business)|markups]], often with prices adjusted to what the salesperson thought the prospective purchaser would be willing to pay for a particular vehicle.
Currently, the MSRP, or "sticker price" — the price of a vehicle as labeled by the manufacturer, is clearly labeled on the windows of all new vehicles. The actual price paid to the manufacturer by the dealer (and all rebates/incentives the manufacturer provides to the dealer) is becoming common knowledge. This information is becoming readily available via the internet. This information is helping consumers purchase vehicles with more ease, avoiding any need to shop from dealer to dealer, because the consumer is much more informed than ever before.
==Minimum advertised price==
'''Minimum advertised price''' (also known as [[resale price maintenance]]) is the practice of restricting pricing at the consumer level. [[Price fixing]] agreements are illegal in many countries when members and terms in the agreement match predefined legal criteria. Fixed pricing established between a distributor and seller or between two or more sellers violates [[antitrust]] laws in the [[United States]]. A minimum advertised price [[policy]] between a distributor and seller is acceptable as long as it is referring to the ''advertised'' price and not the ''selling'' price.{{Fact|date=February 2007}} This does not affect a single manufacturer setting the price on a "take it or leave it" basis.{{Fact|date=February 2007}}
== Rack rate ==
'''Rack rate''' is the [[travel industry]] term for the published full price of a hotel room, which the customer would pay if he or she walked into the hotel off the street and asked for a room. While lower than the maximum rate that the [[hotel]] may be allowed to charge under local laws, it is higher than the rate most travel agents can book for their customers. Sometimes the terms '''run of the house''' or '''walk-up rate''' are used to refer to the same highest rate. The term '''rack rate''' is also used by travel-related service providers, such as car rental companies or travel mobile phone rental companies, to refer to the same highest rate they would charge customers with no pre-bookings.
==External links==
* [http://www.ftc.gov/bc/compguide/illegal.htm FTC Illegal Business Practices]
* [http://www.ftc.gov/opa/2000/05/cdpres.htm Record Companies Settle FTC Charges of Restraining Competition in CD Music Market]
* [http://msl1.mit.edu/classes/esd123/vyas.pdf MSRP and a real value of a car]