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List price is a money term you need to understand. Here’s what it means.
What is list price?
List price is the price established by the manufacturer. Don’t be overly impressed with stores that price items below the list price. Doing so is a common practice. Hold your applause until you see hefty double-digit discounts.
List price has application in almost every industry, since there is such a wide range of prices paid for any one type of product. List price represents the seller’s recommended price and includes a valuation of the materials, labor and transport that went into creating the product. It also factors in a cost to accommodate for supply and demand of the particular item.
List price also is used in reference to real estate pricing since homes also are determined by some of the above-mentioned factors. Real estate is priced according to the sale prices of similar homes in the area, which factor into determination of the sale price of any given piece of property at any given time.
Often, stores put the list price on a product next to the price that they’re selling the product for. This is supposed to help you feel better about purchasing the product, since the sale price often is listed as less than the list price.
However, clever marketing tactics can allow merchandiser to list an inflated list price to make the sale price seem like a good deal. In reality, the sale price is often a truer valuation of a product’s value.
For bigger purchases, like real estate or automobiles, the list price often is higher than what you’ll actually pay for the product. Generally, sellers are willing to negotiate some sort of discount, but in real estate this is not always the case. The market and the product’s supply determine your ability to negotiate a bargain.
List price example
When you go to a department store, look at the $29.99 price tag on a shirt you want to buy. This price may be crossed out and a new price assigned, perhaps $17.99. The sale price may reflect a true discount, although it’s more likely that the list price is inflated to make the sale price seem like a good deal.
What is that car really worth? Learn more about interpreting car sticker prices and what discounts you can expect to find.
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