Which statement best describes the relationship between selling price and MSRP?

• A. Selling price must always equal MSRP.
• B. Selling price may be higher or not the same as MSRP.
• C. Selling price is always lower than MSRP.
• D. Selling price is dictated by the government.

Answer: (B)

MSRP stands for Manufacturer’s Suggested Retail Price. It’s a price manufacturers recommend retailers use, not a binding rule. The selling price is what the retailer actually charges customers, and retailers set prices based on factors like demand, competition, promotions, and inventory. Because of these factors, the selling price can match the MSRP, be higher, or be lower. The key idea is that the MSRP is a guide, while the selling price reflects the retailer’s current strategy, so it may be higher or different from the MSRP. Government pricing controls don’t usually set these everyday retail prices.