When shopping for a vehicle, you may come across terms like invoice pricing and MSRP (manufacturer’s suggested retail price). These terms refer to different price points, and understanding what they mean can help you make a more informed decision during your vehicle purchase. Let’s go over the difference between vehicle invoice pricing and MSRP, how dealerships base their pricing on them, and how pricing works for factory orders!
What is MSRP?
The manufacturer’s suggested retail price (MSRP) is the price that the automaker recommends dealerships charge for a specific vehicle and is visible on the manufacturer’s website. It acts as a guideline for pricing but is not necessarily the price you’ll pay. The MSRP includes the base price of the vehicle, optional features, and destination fees. However, it doesn’t include local taxes, registration fees, or dealership-specific fees.
What is Invoice Pricing?
Invoice pricing refers to the amount a dealership pays the manufacturer to purchase a vehicle for their inventory. It’s essentially the dealership’s “wholesale” price and is often lower than the MSRP.
How Dealerships Determine Pricing
Dealerships like Birchwood use invoice pricing and MSRP as benchmarks when determining the final sale price of a vehicle. Factors like market demand, availability, and current promotions influence the price.
- If demand is high or inventory is low, the vehicle might sell closer to or even above MSRP.
- If there are discounts or promotions, the dealership may offer prices closer to invoice pricing or even below MSRP.
At Birchwood, our goal is to provide transparent pricing that reflects fair market value. By starting with invoice pricing, we ensure that customers receive competitive offers while still accommodating the dealership’s operational costs.
Read more: What Factors Influence Vehicle Pricing?
Factory Orders and Pricing
When you place a factory order for a vehicle, the pricing process is slightly different. Since you’re ordering the vehicle directly from the manufacturer through the dealership, the dealership will generally work with you to customize the build and provide a price based on current MSRP and available discounts. Because factory orders don’t involve existing inventory, you may have more flexibility to secure a price closer to invoice pricing, especially if demand for the vehicle isn’t particularly high.
Invoice Pricing vs. MSRP: Which Offers a Better Deal?
- Invoice pricing often allows for better deals since it’s the baseline cost for the dealership. When dealerships pass along discounts or promotions, buyers can save money compared to paying MSRP.
- MSRP is typically higher than invoice pricing, but it offers clarity and consistency when comparing vehicles.
Why Work with Birchwood?
Birchwood takes the guesswork out of pricing. We provide competitive, transparent pricing based on factors like invoice pricing, market trends, and customer demand. Whether you’re purchasing from our existing inventory or placing a factory order, we work with you to ensure a smooth, fair process.
When factory ordering a vehicle, Birchwood provides you with clear details on pricing, timelines, and available promotions. You’ll receive a tailored vehicle at a price that’s competitive and aligned with your preferences.
Understanding the difference between invoice pricing and MSRP gives you the power to make an informed purchase. Whether you’re buying from existing stock or factory ordering your dream vehicle, Birchwood is here to guide you every step of the way!
