New Jeep Prices: MSRP, Factory Invoice vs True Dealer Cost
Most people mistakenly believe that the Jeep Invoice Price reflects what the dealer paid for a new vehicle - The true Dealer Cost. It is not!
The Dealer Invoice Price has hidden mark up such as holdback and other fees built into the price.
The following Jeep 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.)
Knowing the dealer cost of a new Jeep 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.
Jeep Price Terms & Definitions
In order to effectively receive the best bargaining price on a new or used car, it's important to know the common terms, phrases and types of fees associated with negotiating a better price.
MSRP
The term MSRP stands for Manufacturer Suggested Retail Price. This is the amount that the car manufacturer recommends to the car dealership as the selling price. Also referred to as the list price, a cars MSRP is a great way to compare prices and get a good idea on what you may or may not have to pay.
Dealer Invoice Price
The Dealer Invoice Price is the amount a car dealership will have to pay the manufacturer for the car, which covers the cost of the car plus any additional accessories. But due to Rebates and Dealer Holdback, dealerships will end up paying significantly less than the actual Dealer Invoice Price.
Dealer Holdback
Dealer Holdback are commonly listed as an additional fee when buying a new car. Dealer Holdback is technically money paid by the manufacturer to the dealership. This occurs because dealerships are forced to take out loans to buy cars to place on their lots, the interest of these loans is covered by the manufacturer to the dealer in the form of a Dealer Holdback. This makes it more cost effective for both the manufacturer and dealership.
Manufacturer Incentives and Rebates
A car manufacturer may offer incentives or Rebates to car-buyers to promote the sell of slow-selling car models. A car-buyer usually gets the best possible deal through a manufacturers incentives and Rebates.
Destination Fee
A car dealership fee is a non-negotiable fee that covers the cost of bringing a vehicle from the car manufacturer to the dealership.
Dealer Incentives occur when a car manufacturer wants to get rid of a specific model or needs to clear up space within their inventory. It is a deal given to car dealerships that lowers the amount the dealer
True Deal Cost - The actual price Jeep dealers pay for their new vehicles. Here is how it is calculated:
Formula for Calculating Dealer Cost of a New Jeep:
- Base Jeep 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 Jeep 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.
