What is the purpose of the manufacturer's suggested retail price (MSRP)?

The manufacturer’s suggested retail price (MSRP) serves as a guideline for retailers on how much to charge for a product. The primary purpose of the MSRP is to suggest a selling price that can help maintain a level of pricing consistency across different retail channels. This helps to reduce excessive price competition among retailers, which could ultimately devalue the product or brand image. By providing a recommended price, manufacturers aim to balance the interests of both retailers and consumers, ensuring that customers receive a fair price while allowing retailers to maintain their profit margins.

In this context, suggesting a selling price aids in establishing a perceived value for the product, which can also help support the overall marketing strategy. The MSRP is not designed to eliminate competition or encourage limited manufacturing output, nor is it a means to set a minimum price that legally binds retailers, but rather serves as a helpful suggestion to guide pricing in a competitive market.