Dealer Invoice Price vs MSRP Explained
Understand dealer invoice vs MSRP in the US—what they mean, how they differ, and why neither alone defines a fair new car price.
Dealer invoice and MSRP are two numbers you'll hear when buying a new car in the U.S. Neither alone tells you what you should pay. Here's what they mean, how they differ, and how to use them without overpaying.
TL;DR MSRP = manufacturer's suggested retail price (sticker). Invoice = what the dealer reports paying the manufacturer. Invoice is usually 5–10% below MSRP, but holdback and incentives mean the dealer's real cost can be lower. Fair price = at or below market (often at or below MSRP after incentives), not "at invoice." See what you should pay at autopremo.com.What MSRP Is
MSRP (Manufacturer's Suggested Retail Price) = the price on the window sticker. It's set by the manufacturer and includes:- Base price for the trim level
- Factory options
- Destination charge (delivery to dealer)
MSRP is a suggestion, not a ceiling or floor. Dealers can sell above or below it. In the U.S., paying "at MSRP" isn't automatically fair—it depends on incentives and market. Paying above MSRP (market adjustment) is common on hot models but not "fair" unless you accept it knowingly.
Check out-the-door cost and fair price at autopremo.com.What Dealer Invoice Is
Dealer invoice = the amount the dealer reports paying the manufacturer for the car. It's usually 5–10% below MSRP for many vehicles. Invoice typically includes:- Dealer cost for the vehicle and options
- Destination charge
- Sometimes advertising or regional fees
Invoice is not the dealer's true net cost. Holdback, incentives, and volume bonuses can mean the dealer makes money even when they sell "at invoice" or "below invoice."
The Gap Between Invoice and MSRP
So "at invoice" can still leave the dealer with holdback and other money. "Below invoice" might mean they're giving up some of that—or that incentives are doing the work. Don't assume "at invoice" is the floor.
See real out-the-door numbers at autopremo.com.Why Neither Defines "Fair"
- MSRP is a starting point. Fair = at or below MSRP after incentives on most models, not "we're at MSRP so it's fair."
- Invoice is one input. Fair = at or below market (what informed buyers pay), not "we're at invoice so we can't go lower."
Market = what similar buyers are paying in your area—dealer quotes, incentives, and comparable transactions. Use autopremo.com to see OTD and compare offers.
How to Use Invoice and MSRP When Buying
1. Use MSRP as your starting point
Know the MSRP for the exact trim and options. That's your reference for "sticker." Then look at incentives (rebates, special APR) from the manufacturer. Target = MSRP minus incentives, minus any dealer discount you can get.
2. Use invoice as context, not truth
If the dealer says "we're at invoice," that's one data point. It doesn't mean they have no room. Compare their OTD to other dealers and to your target (MSRP minus incentives minus $X). If their OTD is still high, push for more or walk.
3. Focus on out-the-door price
Negotiate and compare out-the-door price (selling price + tax + fees), not just "price" or "invoice." That's what you actually pay.
4. Get multiple quotes
Same car, different dealers. Compare OTD. The spread tells you how much room exists. Autopremo.com helps you plan OTD so you can compare offers fairly.
What Dealers Say vs What to Do
- "We're at invoice." Compare OTD to market. If it's fair, you can accept. If not, push or walk.
- "We're below invoice." Possible with incentives. Still compare OTD to other dealers.
- "We can't go below MSRP." On hot models, maybe. On most models, get other quotes. Often someone will do better.
Your Invoice vs MSRP Checklist
- [ ] MSRP known for exact trim and options (including destination)
- [ ] Invoice known as context (optional; don't let it replace market)
- [ ] Manufacturer incentives for your ZIP and profile checked
- [ ] Target: MSRP minus incentives minus dealer discount (if any)
- [ ] Comparing and negotiating on OTD, not payment or "price"
Bottom Line
Dealer invoice = what the dealer reports paying the manufacturer (often 5–10% below MSRP). MSRP = manufacturer's suggested retail price (sticker). Neither alone defines fair. Fair = at or below market (often at or below MSRP after incentives). Use invoice and MSRP as context; use OTD and market data to decide what to pay. Autopremo.com gives you the tools to see OTD and compare offers so you don't overpay.