Definition: List price, often called catalog price, is the full price that an item is advertised at without taking into account any discounts or special offers. In other words, this is the amount of money the business is willing to sell their products for.
What Does List Price Mean?
When a company creates a print catalog or online store, it lists products with an assigned price. The price printed in the catalogs and websites is called the list price. This price does not reflect any trade discounts or sales. Instead, it’s the full price of the item.
Don’t get the list price confused with the MSRP. MSRP stands for manufacturers suggested retail price. This is the price that the manufacturer recommends the retailersell its products for. Both the list and the MSRP are often listed in catalogs to show the “savings” that the customer will receive.
Example
Take a guitar for example. Gibson manufactures guitars and sells them in mass quantities to big box retailers across the country like Guitar Center (GC). GC purchases the guitars at much lower costs from Gibson than the customers will eventually pay, but how does GC know what a customer should pay for the product? Well the manufacturer, Gibson, gives them an estimate of what they think the product is worth and what it should sell for, MSRP.
When GC publishes their sales fliers, they typically show both the MSRP and the list price or selling price. For example, a new guitar might have an MSRP of $3,000, but GC’s list price is only $2,200. This gives the customer the illusion of a good deal.
Trade vendors also advertise their products to other companies using a list price. Often an early pay or cash discount is then taken off the list price for company who are willing to take advantage of it.
