MSRP is the sticker price the manufacturer suggests. Invoice is what the factory bills the dealer, usually a few percent lower. The out the door price is what you actually pay: selling price plus add-ons, doc fee, sales tax, title and registration, minus rebates. Compare dealers on the out the door number, because it is the only one that includes everything.
The three prices side by side
| Price | Who sets it | What it includes | Where you see it |
|---|---|---|---|
| MSRP (sticker) | The manufacturer | Base price, factory options and usually the destination charge | The window sticker on the car |
| Invoice | The manufacturer, billed to the dealer | The dealer's billed cost before holdback and dealer incentives | Pricing sites, or a dealer who chooses to show it |
| Out the door (OTD) | You and the dealer | Selling price, add-ons, doc fee, taxes, title, registration, minus rebates | A written quote or buyer's order |
The selling price sits somewhere between invoice and MSRP for most cars. Sometimes it lands below invoice. On scarce models it can land above MSRP. The OTD price is then built on top of whatever selling price you agree.
What MSRP tells you
MSRP is a starting point, not a price you are expected to pay. In August 2026 the average buyer paid about 3.4% below the average MSRP, according to Kelley Blue Book data reported by Digital Dealer. Edmunds said early in 2026 that the gap between sticker and transaction prices was the widest since February 2021, in a presentation to the Chicago Fed.
That 3.4% is an average across every buyer, including people who did not negotiate at all. It is a useful floor for what "a normal deal" looks like, not a target. Our guide on how much below MSRP to pay goes deeper on how to judge a discount.
What invoice tells you, and what it hides
Invoice is what the factory bills the dealer. It looks like the dealer's cost, but it is not. Dealers get money back from the manufacturer after the sale, and some of it never shows on the invoice.
Holdback
Holdback is a percentage the manufacturer pays back to the dealer, usually each quarter. Edmunds describes 2% to 3% of MSRP as typical and notes it is built into the invoice price, per its holdback explainer. On a hypothetical $40,000 car, that is $800 to $1,200 the dealer receives even if it sells at invoice.
Holdback varies by brand. Third-party estimates put Toyota, Honda and Lexus at about 2% of base MSRP, Ford, GM and Stellantis at about 3% of total MSRP, and BMW, Audi and Porsche at none, according to CarWhere. Manufacturers do not publish these schedules, so treat the figures as estimates. Our dealer holdback guide explains why holdback is rarely something you can negotiate directly.
Dealer cash and bonuses
Manufacturers also pay dealers incentives you may never see advertised: dealer cash on specific models, allowances, and bonuses for hitting monthly sales targets. Edmunds notes these can put the true dealer cost below invoice. This is why a dealer can sometimes sell under invoice and still make money, especially near the end of a month or quarter.
Where incentives fit
Incentives are the manufacturer's money, and they come in three main forms.
- Customer rebates. Cash off the price that any buyer can claim. These come off after you agree on a selling price, so make sure the dealer applies them on top of the discount rather than counting them as the discount.
- Special financing. Low APR offers through the brand's lender. Edmunds found 24% of new-vehicle loans carried an APR of 3.99% or less, in the same Chicago Fed presentation. Some rebates cannot be combined with special rates, so ask which is worth more to you.
- Dealer cash. Paid to the dealer, not to you. It gives the dealer room to discount but will not appear as a line on your quote.
Incentives are large right now. Kelley Blue Book put average incentive spending at 6.5% of the average transaction price in August 2026, per Digital Dealer. J.D. Power forecast an average of $3,451 per vehicle for July 2026, according to its press release. These are industry averages across all brands; the incentives on the car you want may be much higher or zero.
Why the out the door price is the number to compare
Two dealers can quote the same car with similar selling prices and still be far apart once fees and add-ons land. Here is a hypothetical example. It assumes a 6% sales tax applied to everything and $300 in title and registration, purely to keep the math simple.
| Line | Dealer A | Dealer B |
|---|---|---|
| Selling price | $38,500 | $38,900 |
| Dealer add-ons | $1,495 | $0 |
| Doc fee | $899 | $399 |
| Sales tax (6%, hypothetical) | $2,453.64 | $2,357.94 |
| Title and registration (hypothetical) | $300 | $300 |
| Out the door | $43,647.64 | $41,956.94 |
Dealer A advertised the lower selling price. Dealer B is about $1,690 cheaper to drive home. A buyer comparing only selling prices, or negotiating "down from MSRP" or "up from invoice," would pick the wrong dealer.
Doc fees alone swing widely. CarEdge reports a national average of $477, with Florida dealers averaging $973, in its dealer fee report. Our out the door price guide breaks down each line, and the dealer add-ons guide covers which extras you can refuse.
How to use these numbers when you shop
- Look up MSRP for your exact trim and options so you can spot a market adjustment.
- Look up current customer rebates and financing offers on the manufacturer's site.
- Use invoice and typical holdback as context for how much room a dealer has, not as an opening bid.
- Ask several dealers for a written, itemized OTD quote on the same configuration.
- Compare OTD totals, then check each line for anything you did not ask for.
Consumer Reports gives similar advice: get quotes from several dealers, negotiate the price separately from your trade-in and financing, and avoid negotiating on the monthly payment, per its negotiation guide.
How SnagMyCar uses OTD quotes
We skip the invoice-versus-MSRP argument entirely. We email every matching dealer in your radius for a written, itemized OTD price, share the best number with the others and ask them to beat it, then show you the results side by side. See how it works for the rounds and timing, and pricing for the $499 fee and the guarantee. You can also check a quote yourself with the out the door calculator.
Ready to see real numbers for your car? Start your search.
Questions
Is invoice price the dealer's real cost?
No. Invoice is what the manufacturer bills the dealer, but dealers also receive holdback, which Edmunds describes as typically 2% to 3% of MSRP, plus dealer cash and sales bonuses that are not shown on the invoice. That is why a dealer can sometimes sell a car below invoice and still make money, especially near the end of a month or quarter.
Should I offer invoice price for a new car?
Invoice is useful context but a weak opening bid. It ignores incentives, holdback and how scarce the car is, and it says nothing about fees. A better approach is to ask several dealers for a written, itemized out the door quote on the same car and let them compete on the total. The best total may land above or below invoice depending on the model.
Does MSRP include the destination charge?
The destination charge is listed on the window sticker, and the MSRP figure most people quote usually includes it. On a dealer quote, ask whether destination is already inside the selling price so it is not added a second time. It is a factory charge, so you negotiate the selling price rather than the destination line itself.
Why compare out the door price instead of selling price?
Because the out the door price includes everything you will pay: selling price, dealer add-ons, the doc fee, sales tax, title and registration, minus rebates. Two dealers can advertise similar selling prices and still be far apart once a high doc fee or a protection package is added. The out the door total is the only number that makes quotes directly comparable.
Are manufacturer rebates subtracted before or after the negotiated price?
Customer rebates should come off after you agree on a selling price, as their own line on the quote. Make sure a dealer is not counting the rebate as its discount. Some rebates require financing through the brand's lender, and some states tax the price before rebates are applied, so ask the dealer to show how each one is handled.