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What is List Price? - Definition, Examples & Formula

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

The list price is something you need to know every time you go shopping. Learn what the list price means and how you can use it to help you calculate your final cost when shopping.

List Price Definition

Do you remember the last time you went shopping? Do you remember what one piece of information you looked at for each item you put into your shopping cart? Wasn't it the price for each item? When this price is the same as the one recommended by the manufacturer or maker of the item, then it is called the list price. You'll see this noted as the MSRP (manufacturer's suggested retail price), a price the manufacturer has set based on supply and demand of their item. There is no hard and fast formula to find this list price. You'll most often see an MSRP for things such as electronics and cars. If a product doesn't have an MSRP, then the list price is simply the initial price of the product before any discounts are applied.

Examples

For example, when you go to the car dealer, the new cars will have big stickers on the windows showing you the features of the car, the gas mileage, and the MSRP. This is the list price you are expected to pay before any discounts are applied.

When you go shopping at a department store, you'll find the list price shown on the price tags attached to various items. With these items, you may not always see the MSRP letters, but you will see a price written or printed on the product packaging or a sticker placed on the product.

A price sticker on a product
list price

Discounted List Price

This doesn't mean that this is the price you will always pay. Many times, you'll pay less than the list price. This is because many stores have various customer promotions going on at any given time. Stores often give out discounts and/or coupons. When your favorite store does have a promotion, you can use the list price to help you find the price that you'll actually end up paying.

Imagine you are eyeing a pair of sleek, comfortable sneakers. The list price for these shoes is $80. You've been wanting these shoes for a while now. And today might be the day you get them because they are now on sale. The discount today happens to be 20 percent!

Formula

When it comes to finding the final cost after a discount, you'll be using this formula:

  • price you pay = list price * ( 1 - discount )

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