MSRP Deep Dive
Manufacturer's Suggested Retail Price (MSRP) is the price at which the manufacturer suggests a retailer sell their product. This price should reflect the estimated value of a product to consumers. Cost and MSRP are used to calculate Gross Margin (or the return) of a product. This price should be competitive to the market while also providing the retailer room to discount the product without depleting their margin.
Note: Buyers understand that these figures are just estimates, so the final cost is still up for negotiation between you and any interested retail buyers!
Your Average: This is displayed as the blue vertical area and spans from about $1.00 to slightly below $5.00 in this example. The supplier’s MSRP range is used to calculate “Your Average,” displayed in the bottom left-hand corner of the graph. The average MSRP range of the supplier shown in the example above is $3.60.
All Product Average: The dark blue line on the graph displays the MSRP range across all products in the categories selected. This range is used to calculate the “All Products Average” MSRP within these categories, which would be $8.10 in this example. From the graph, you can see that the Category Range is skewed heavily towards a higher price point.
Buyer Interest Average: The light green line on the graph shows the MSRP range of products that received buyer interest within the selected categories. The average MSRP of products receiving buyer interest is $7.20 in our example. The graph shows that the Buyer Interest Range drops off quickly as the MSRP rises.
This information gives suppliers context for how their product fits into the industry. If a supplier’s average MSRP is significantly higher than the industry average, they should ensure they have unique selling points to back up the price. We don’t recommend suppliers change their MSRP solely based on the Margin Deep Dive, but it is important that they understand how and why they calculated their price and why it is higher or lower than others in its category.