What Is a Sticker Price?
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What is a sticker price, and what does it mean to you, the consumer? A sticker price consists of the sale price of an item. As such, it can include the MSRP (manufacturer’s suggested retail price), any options installed by the manufacturer, the manufacturer’s destination charge, as well as the fuel economy (mileage).
You can find the sticker price on the Mulroney label. This is the sheet you see affixed to the window of vehicles being sold by a dealership or car lot. Moreover, the Mulroney label is required by federal law and may not be removed by anyone other than the buyer.
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What Is a Sticker Price: Explained
Sticker price is commonly associated with the manufacturer’s price affixed to a car. However, the term is not exclusive to the automobile industry. You will hear the term sticker price throughout colleges, as they use it to refer to the total annual cost of a student’s education.
As such, sticker price in academia can include:
- Campus fees
- Lab fees
- Housing
- Tuition
- Books
When students get a financial aid report, it will list the sticker price, followed by adjustments. These are made according to the needs of each student, as well as any scholarships or grants that they might receive.
In terms of automobiles, however, sticker price includes the MRSP and other attributing factors, such as:
- After-market upgrades
- Dealership markups
- Presale preparation
- Transport fees
Depending on how popular a car is, including its various models, dealerships may choose to mark up the sticker price in an effort to make more money off of the highest paying buyer. What’s more, these dealerships might try to artificially increase the sticker price.
Why would they do that, you ask? It’s actually a longstanding practice in which the dealer raises the price and then offers “discounts” on a particular vehicle. What is a sticker price discount? To the uninitiated, it looks like they are getting a bargain, when in fact, they likely end up paying more or the same.
Remember, dealerships can charge whatever they want for a vehicle. The MSRP is the suggested retail price, meaning it’s not exactly written in stone. This is what allows dealers to mark up the price or lower it.
The whole idea of dealerships adjusting the price is so that they can make more profit.
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When Is It OK to Pay Sticker Price?
Anyone with experience buying vehicles from car lots and dealerships likely knows that the sticker price is usually higher than the best offer. However, there are times when you might need to pay what the manufacturer and dealer are asking.
Supply and Demand
This usually comes down to supply and demand. If there’s a hot vehicle on the market that you’ve been dying to get your hands on, you may find it challenging trying to find one in stock. And if you do eventually find the car of your dreams, the demand and limited supply might mean you have no other alternative but to pay the sticker price.
Often, you can tell when a dealership is going to stick to its guns on sticker price. If there’s a popular new car on the market that has proven difficult to keep in stock, dealers know that consumers will pay what they’re asking just to get behind the wheel of the car they want.
Therefore, it might be pointless to try bargaining on sticker price. You are likely better off jumping on the opportunity to own the vehicle you want because you might not see another one for sale for quite some time.
Now, with all that said, patience can pay off big-time. If you’re willing to wait, the price will eventually come down. Any time something new hits the scene, you can expect to pay top dollar for it. This is true for all areas of retail, whether it be the latest smartphone, video game console, computer, or power tool.
Custom Orders
Let’s say you’re looking for a specific make and model with a unique color and options. Chances are, you might find one dealership that has your vehicle in stock. Since the dealer knows that what they have is special, it’s going to be very difficult to get a discount.
Custom orders are just that: custom. As such, you can almost always expect to pay the full sticker price. Sometimes unique sells, and other times, it doesn’t. But dealerships are holding out for the person who does want to buy something unique.
So if you attempt to haggle on the sticker price, the dealer knows you have no leverage. You can’t say you’ll just buy that car elsewhere if they refuse to budge on the price. They are the only show in town when it comes to that particular custom vehicle.
Company Policy
While you won’t hear this in dealerships that sell new cars, used car lots might throw out this line from time to time. Take CarMax, for example. They actually have a “no-haggle” policy in place that prevents you from trying to get a better price.
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How Much Can a Dealer Take Off the Sticker Price?
The answer to this question largely depends on the make, model, and demand of the vehicle. With that said, the average price that a dealer has marked up the sticker price is anywhere between $2,000 and $4,000.
Cars that are in-demand or hard to come by might be marked up even more to ensure that the dealership sees as much profit as possible. However, many dealers are happy making a profit of $1,500 to $2,500.
Keep in mind that the dealer has to make something on the vehicles they sell. The last thing they want to do is break even or take a loss. As such, you need to remain reasonable throughout the buying process.
While it’s no fun to pay more for something than what it’s worth, the world of automobiles is vastly different from others. Think of buying a vehicle in the same way that you would if you were buying a house. You’re making a substantial investment, so the price you pay isn’t always the most ideal.
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