The list price of a product is also known as the suggested retail price (SRP). This amount is determined by the manufacturer of the product. At the end of the day, however, the product may be sold to the end consumer for higher or lower than the list price. The final price that the product is sold at depends on a variety of factors. Some factors include:
Availability of the product. If there is a surplus of the product, the reseller can afford to lower the price and carry out sales.
Demand for the product. On the other hand, when there is a high demand for products, the reseller can afford to increase the price above the list price, and buyers will still continue to pay the price.
Profit margins. Resellers needs to make sure they make a healthy profit so this is taken into consideration.
Other terms used in lieu of list price are manufacturer’s suggested retail price (MSRP) and recommended retail price (RRP).
The list price was conceptualized in order to provide some degree of standardization with regard to the price. The average consumer does not normally purchase products directly from the manufacturer. Instead, resellers act as a go between. These resellers can purchase the products at much lower prices, but they also have to make a profit from their activities. While they do have control over how much they add to the cost, they are somehow guided by the list price.
Consumers most often look at the list price for commodities such as cars, electronics, and other appliances.