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Car Invoice Prices, MSRP and Car Market Value: New Car Buying Terms Defined

Invoice pricing on new cars, plus other car pricing terms defined

Car buying has a language of its own. "MSRP" is one of many car pricing terms you'll encounter at a car dealership — "invoice price," "sticker price," "car market value" and "destination charge" are others. It's important to understand the meaning of these pricing terms if you want to get the best deal. With this in mind, here are some frequently asked questions about MSRP and other car shopping terms you may come across.

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New car invoice prices

Invoice pricing on new cars (sometimes referred to as "dealer cost") is roughly what the dealership paid the automaker for a given vehicle in its inventory. It appears primarily on the invoice that the car manufacturer sends to the dealership for billing purposes. It's not commonly known, but dealerships are the ones that actually purchase the vehicles from the automakers, and they need to be bought at a reduced price (below MSRP) for the dealership to make a profit when it sells them.

A new car's invoice price has often been used as an informal measuring stick for determining a good price. Comparing it to a vehicle's asking price can give you an idea of the potential discount range. The idea is that if you were able to buy a car at or below invoice, you prevented the dealership from making a greater profit and, therefore, got ttheiryou the invoice pricehe best deal.

While the invoice price is an important part of shopping for a new vehicle, it isn't the only number you need to focus on. There are many aspects to getting a good deal beyond simply finding the invoice figure, so treat it as one of many tools at your disposal.

Related article: What Are the Elements of a Good New Car Deal?

Where do you find the invoice price?

Since the new car invoice is primarily used for internal dealership purposes, this number isn't readily available to most car shoppers. If you ask nicely, the salesperson will sometimes show you the invoice on his or her computer or send you a printout. The salesperson, however, is not obligated to show the invoice price to you.

A more convenient method is to find the invoice here on Edmunds. When you are browsing any car review page on Edmunds, there should be a "Build & Price" link on the right of the page, about halfway down. You then need to configure the vehicle with the trim and options you want and then the invoice will be listed in the "Price breakdown" section.

For detailed instructions and screenshots, see How to find TMV & Invoice Pricing on Edmunds

What is MSRP?

MSRP stands for the manufacturer's suggested retail price. As the name indicates, it is the price that the manufacturer recommends that dealers charge for a new vehicle, plus any options or packages. Note that, as the name implies, MSRP is just a suggestion, meaning that the dealership is within its rights to charge more or less than this starting figure.

Related article: MSRP meaning: Manufacturer's Suggested Retail Price

Invoice vs. MSRP

In general terms, the invoice is what the dealership paid for a new car, and the MSRP is what the automaker recommends a customer pay for that same car. The invoice price will always be lower than the MSRP, and in some cases, that gap is much less than you might expect. The profit margin on new cars can be fairly low, and the more discounts a dealership gives you, the less they potentially make on the car deal. Dealers are businesses, after all, which is why you often see dealer-added accessories or markups on high-demand vehicles. 

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Can you buy a car at or below the invoice price?

Yes. Sometimes you can negotiate to buy a car at invoice price or even lower. It can sometimes happen when a car is selling poorly, or when a manufacturer offers incentives such as customer or bonus cash to dealers to stimulate sales and offset any losses from a lower-priced sale. If a car has been sitting on a lot for too long, a dealer might be motivated to sell for the invoice price simply to make room for new inventory. Each dealer's overhead and assorted costs and sales goals are also different, giving some more latitude than others to make deals.

A host of variables often go into the final purchase price or "out-the-door price," and while buyers don't need to venture into the weeds of dealership operations, it helps to know what the salesperson across the table, or on the other end of the phone, is up against in any transaction.

Helpful tool: Edmunds Deals and Incentives

New car window sticker

On any given new or used car, you'll find a piece of paper attached to the front or side window with pricing listed on it. This label is referred to internally as the "Monroney sticker," or simply "the Monroney," but many people have taken to calling it the "window sticker." The presentation of the window sticker can differ by automaker, but they all contain details about the vehicle's standard and optional features, plus the MSRP.

Related article: How to Read a New Car Window Sticker

What is the "sticker price" on a car?

When people say "sticker price," they're usually referring to the total MSRP of the vehicle, including options, packages, destination charges and other fees such as the gas guzzler tax (if applicable) or any manufacturer discounts. The sum of these costs is the sticker price, which may be labeled on the sticker as "total vehicle price," "total price" or even "total MSRP."

What is a destination charge?

The destination charge covers the costs that an automaker incurs when transporting a new vehicle from the factory to the dealership. This cost is passed on to the customer and is part of the overall sticker price of the vehicle. It cannot be negotiated. The destination fee is one of many fees that are part of buying a car. Note that when you see a vehicle's price in an advertisement or commercial, it often does not include the destination charge to make the number more appealing. 

This article offers more detailed information about other fees you may come across and ones that might raise a red flag.

Related article: What New Car Fees Should You Pay?

Car market value

The market value of a car, sometimes called "fair market value," is the average figure that shoppers in a given area are paying for that vehicle. If you're wondering, "What should I pay for a new car?" the market value is a good place to start.

Edmunds calls this the Edmunds Suggested Price; it was previously called True Market Value (TMV). The Edmunds Suggested Price is what we recommend you pay, not including taxes or fees. This market value is based on our analysis of millions of data points including supply, demand, incentives, options and recent nearby transactions.

For some new cars, the market value will usually lie between the invoice price on the low end and the sticker price on the high end. But there are also times when the average price can go above the MSRP for cars in limited production numbers or in high demand.

For used cars, the market value is based on the average sales or trade-in price for comparable vehicles. Because the market value is an average, some people will pay less and others will pay more. But by looking at the TMV or the Edmunds Suggested Price, you can get a rough idea of how popular the vehicle is and what you should expect to pay for it. If you already have a quote from the dealership, use the Edmunds Price Checker to help determine if you're getting a good deal. And for those trading in a vehicle, use Edmunds' appraisal tool to help you determine its trade-in market value.

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What is the Kelley Blue Book value?

When people mention the Kelley Blue Book value or "Blue Book price," for short, they are either specifically referencing the Kelley Blue Book (KBB) pricing data or they are using a generic descriptor (such as Kleenex or Xerox) to refer to the market value of a car. KBB is one of many resources that dealerships use to evaluate the pricing of a trade-in or used car. The market value of a vehicle gathered from KBB is often also referred to as the "Blue Book value" or "Book value." Like Edmunds, Kelley publishes its own used car values, using its own proprietary methods. Dealers will also consult NADAguides or the "Black Book," which are less consumer-oriented and are designed to help them determine wholesale prices.

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The bottom line

The market is always changing, and prices fluctuate constantly. So it's important to shop around for the best deal. The car pricing terms here will guide you as you get quotes and consider various offers. As you shop, you will become an expert on car pricing in your area during the period you're shopping for your car. And when you know the numbers behind the deal, it will make you a better negotiator.


See Edmunds pricing data

Has Your Car's Value Changed?

Used car values are constantly changing. Edmunds lets you track your vehicle's value over time so you can decide when to sell or trade in.

Price history graph example