MSRP meaning

MSRP stands for manufacturer's suggested retail price: the shelf price the brand suggests, not the price the retailer pays. A boutique buys a dress at the wholesale price and sells it to shoppers at or near the MSRP.

Brands set an MSRP so the same style sells at a consistent price across stores and on their own website. Retailers use it to judge whether a style earns enough margin to deserve a place on the floor.

You will also see it called the suggested retail price (SRP), the recommended retail price (RRP) in the UK and Europe, or simply retail.

Not always: MSRP is the suggested price, and the retail price is whatever the store actually charges. Stores often sell at MSRP at full price, then go below it in promotions and end-of-season markdowns.

A brand can suggest a retail price, but in many countries it has limited power to enforce one, and the rules differ by market. Check local law before you make an MSRP mandatory or act against a store for discounting.

A common approach is to multiply the wholesale price by 2 to 2.5, which gives the retailer a 50% to 60% gross margin at full price. Doubling the wholesale price is called keystone pricing.

The multiplier is a starting point, not a rule. Check the result against what comparable brands charge in the same stores, and round it to a price point shoppers expect, such as $125 rather than $121.

Here is a linen jacket that wholesales for $55. Keystone would put it at $110, but the brand rounds up to a $125 MSRP to match its other jackets, which gives the retailer a 56% margin at full price.

In wholesale, MSRP is the number buyers use to check margin: they compare it with your wholesale price on the line sheet and decide whether a style pays for its space.

Buyers also use MSRP to place a style in their store. A $125 jacket has to sit comfortably beside the other $100 to $150 jackets on the rail, so an MSRP far outside that range is a reason to pass.

Brands print MSRP on line sheets, hang tags and their own website. Keeping one MSRP across all three stops a stockist from being undercut by your direct-to-consumer site.

• Setting MSRP before the wholesale price

  Working backwards from a retail price you like can leave too little room for your own margin. Set the wholesale price from cost first, then check the MSRP it implies.

• Undercutting stockists online

  Selling below your own MSRP on your website teaches shoppers to skip your stockists, and buyers notice when they plan their reorders.

• Using one multiplier for every account

  Some accounts, such as department stores, may ask for a higher margin than boutiques. Confirm each account's expectations before you print the line sheet.

• Converting currencies at today's rate

  An MSRP converted at the exchange rate of the day rarely lands on a sensible price point. Set a rounded MSRP for each currency you sell in.

ModaFlow stores a wholesale price and an MSRP on every style, prints both on your line sheet PDFs, and shows both to buyers in a shoppable lookbook.

To work out an MSRP from cost, use the free wholesale price calculator, or check a single price with the markup calculator and the margin calculator.