Ford Prices: MSRP vs Factory Invoice vs True Dealer Cost
The Dealer Invoice Price has hidden mark up such as holdback and other fees built into the price.
The following Ford price guides strip these hidden dealer profits out and illustrate the MSRP, the invoice price, Holdback and the true dealer cost. (See price definitions below.)
Why You Should Know the True Dealer Cost...
Knowing the dealer cost of a new Ford gives you needed leverage when it comes time to negotiate a great price. Negotiating from the cost up and not the MSRP down can save you thousands on your next purchase.
Ford Price Terms & Definitions
Buying your first new car can be an exciting experience. Unfortunately, it can also be confusing. Below are some commonly used industry terms to help you get a leg up on the process.
The Manufacturer Suggested Retail Price, usually abbreviated to MSRP, is the suggested retail price set by the manufacturer. The manufacturer sets the price based on certain criteria. The MSRP does not vary from store to store because it is not set by the individual retailers.
Dealer Invoice Price
The Dealer Invoice shows the amount that the dealer must pay the manufacturer to purchase the car so that it can be sold on their lot. Due to Rebates and Holdbacks, this many not reflect the actual cost.
Sometimes manufacturers artificially inflate the prices charged on the dealer invoice. The dealer has to pay a higher cost initially, but after a set amount of time, the manufacturer refunds the extra amount that was charged.
Dealer Incentives are Rebates and other incentives offered by the manufacturer to dealers. Special deals may be offered to encourage dealers to move particular models.
Regional Ad Fees
These fees are cost of business fees charged to the dealer for advertisements that the manufacturer runs in the dealer’s local area. They are not often negotiable and are charged in the dealer’s invoice.
Destination Fees are basically shipping and handling fees that are charged to the dealer. It covers the cost of getting the car from the factory to the dealer’s showroom.
Manufacturer Incentives and Rebates
These incentive are similar to Dealer Incentives but are offered to the buyer instead. All the savings from these Rebates go directly to the buyer.
True Deal Cost - The actual price Ford dealers pay for their new vehicles. Here is how it is calculated:
Formula for Calculating Dealer Cost of a New Ford:
- Base Ford Invoice Price + the dealer Invoice price of Options + Destination - Holdback = Total Dealer Cost.
- What is Dealer Holdback? A hidden amount that manufacturers give back to a dealer. It is a percentage of the MSRP or the Invoice price. The holdback for Ford is 3% of the Total MSRP. (See the New Car Dealer Cost Example.)
Total Dealer Cost - Rebate and Incentive + Taxes / Licensing Fees = True Dealer Cost.(See Ford Rebates and Incentives.)