What is Manufacturer's Suggested Retail Price (MSRP)?
Learn what MSRP means, how to calculate it and why it matters for CPG brands to protect margins, manage pricing and maintain brand reputation.
If you’re running a consumer packaged goods (CPG) brand, there’s a good chance you’ve come across the retail terminology MSRP. A retailer may have asked for your suggested retail price in a sell sheet or you’ve wondered how to set a price that protects your profit margins while keeping your products competitive at different retail locations.
Understanding MSRP is part of building a durable, competitive brand. This guide will break down what MSRP is, why it matters, how to calculate it and how to manage it in the wild world of wholesale, DTC and retail.
Why MSRP Matters for Consumer Businesses
If you’re selling retail products, your MSRP impacts profit margins, perceived value and retailer trust.
A well-set MSRP:
Anchors your retail price across channels
Sets shopper expectations
Helps retailers plan promotions
Prevents a race to the bottom with lower prices
Supports your wholesale price by maintaining margin room
Without clear communication of MSRP, there will be price gaps across different retailers, confusing customers and eroding brand value. Worse, if one retailer advertises discounts far below others, you risk upsetting key partners.
For example, if you sell granola with an MSRP of $6 but a big online retailer lists it for $3.99, your local natural grocery might complain and you could lose shelf space.
How to Set an Effective MSRP
MSRP calculation starts with your costs and your wholesale price. You want to make sure every step of the chain can make money while the final price still looks fair to consumers.
Start here:
Know Your Costs
Total your cost of goods sold (COGS): ingredients, packaging, labor, shipping and overhead. Include operating costs that contribute to making and moving the product.Set Your Wholesale Price
This is the price retailers pay when they order from you. Wholesale price usually builds in enough margin to cover your costs and generate profit. Take into account whether you're using a distributor or not.Factor in Retail Markup
Retailers typically apply a markup of 40% to 50% (sometimes more for smaller quantities or higher priced goods). Food and beverage brands often see a keystone markup, doubling the wholesale price. For example, if your wholesale price is $4, your MSRP might land around $8.Consider Market Forces
Check competitor pricing. What is the market price for similar products? Setting a high suggested price might signal quality, but it can also scare off price-sensitive shoppers in a competitive market.Leave Room for Promotions
Retailers love to advertise discounts. If your MSRP is too low, there’s no space for temporary price drops (TPR) without hurting margins. Give them room to sell products at a lower price while staying profitable. You are the one who will be paying for promotional costs, not the retailer!Align with DTC Pricing
Your website pricing must make sense alongside MSRP. Don’t undercut your own wholesale partners too drastically or you’ll damage trust.
Here is our calculator to calculate the appropriate MSRP.
MSRP vs MAP: What’s the Difference?
It’s common to mix up MSRP and MAP (Minimum Advertised Price). Here’s the difference:
MSRP is your suggested retail price. It’s a recommendation. Retailers don’t have to follow it.
MAP is the minimum price retailers are allowed to advertise publicly. They can sell for less in-store but can’t promote a lower price online or in ads.
MAP helps prevent aggressive online discounting that damages perceived value. Enforcing MAP is legal in many cases, while resale price maintenance by forcing a minimum price at the final point of sale often violates competition theory and antitrust laws.
What Retailers Actually Do with MSRP
Your MSRP is a guide, not a rule. Retailers decide the selling price based on market conditions, shelf strategy and their own profit targets.
Common behaviors:
Selling above MSRP to earn more profit
Offering discounts during high demand seasons
Bundling products to drive more sales
Marking down slow movers to clear inventory
Variations across different retail locations are normal, but it can hurt your brand if it gets extreme. That’s why monitoring pricing (especially online) is worth the effort.
How to Monitor and Protect Your MSRP
State MSRP in Your Wholesale Materials
Include the recommended price clearly in your sell sheets and distributor portals.Communicate Your Pricing Strategy
Be upfront with retailers about why your MSRP matters. Protecting brand reputation and fairness benefits them too.Use Online Price Tracking Tools
Tools like Google Shopping searches can reveal when retailers list below your MSRP.Consider MAP Policies
If channel conflict is a problem, create a MAP policy to enforce the minimum advertised price, not the final sale price.Build Margin Buffer
Pad your wholesale price enough to tolerate some retailer discounting without killing your margin.
When Should You Adjust Your MSRP?
As market conditions change, so do your costs and competitive landscape.
Consider adjusting MSRP when:
Raw material or shipping costs rise
You launch new packaging or product
Competitor pricing shifts
You enter new channels with different pricing strategies
You plan big seasonal promotions
Learnings based on feedback and sales performance
For example, if your ingredient costs jump 20%, raising MSRP may be necessary to protect profit margins, even if you risk higher prices on the shelf.
MSRP in Action
Example 1: Snack Brand Launch
A startup granola company sets wholesale price at $3. Retailers expect a keystone markup, so MSRP lands at $5.99. The brand lists this MSRP in its wholesale catalog. When Walmart discounts it to $4.49, the brand notices a natural grocery partner starts complaining. To fix this, the brand sets a MAP policy at $5.49.
Example 2: Skincare Expansion
A beauty brand expands into prestige retailers. Their old MSRP of $18 no longer fits the premium channel, where similar products sell for $24. To protect brand reputation and match market price, they raise MSRP to $21, giving retailers and DTC site room to run promotions.
MSRP and Resale Price Maintenance
Here’s the legal edge:
MSRP is a recommendation. You can’t force retailers to sell at this price.
MAP covers advertised prices, not the final price paid at checkout.
Resale price maintenance is when a brand forces a minimum price at the point of sale. It is restricted under U.S. antitrust law.
To stay on the right side of fair competition rules, use MSRP and MAP as tools, not hard demands.
Common MSRP Mistakes to Avoid
Setting MSRP too low, leaving no room for promotions
Forgetting to state MSRP in sell sheets
Letting online retailers undercut brick-and-mortar partners
Ignoring competitors’ prices in a perfectly competitive market
Changing MSRP too often, confusing retailers and shoppers
MSRP Is a Strategic Tool
The manufacturer’s suggested price shapes how your product is perceived, sold and valued across retail locations. A well-calculated MSRP supports your brand’s positioning, profit margins and retailer relationships. Get it right and you’ll build a pricing strategy that drives more sales.
1. What does MSRP mean in retail?
MSRP stands for Manufacturer’s Suggested Retail Price. It’s the price the manufacturer recommends retailers charge for a product to ensure consistent pricing across different stores and locations.
2. How is MSRP calculated for CPG products?
MSRP is calculated by factoring in the total cost of goods sold (COGS), setting a profitable wholesale price, adding typical retail markups (often 40–50%) and leaving room for promotions or discounts without hurting profit margins.
3. What is the difference between MSRP and MAP pricing?
MSRP is the suggested retail price manufacturers recommend, but retailers aren’t required to follow it. MAP (Minimum Advertised Price) sets the lowest price retailers can publicly advertise, helping protect brand value from aggressive discounting.
4. Can retailers sell above or below MSRP?
Yes, retailers can sell products above or below MSRP based on market conditions, promotions or inventory needs. However, if a brand enforces a MAP policy, retailers can’t publicly advertise prices lower than the MAP.
5. Why is setting the right MSRP important for CPG brands?
A well-set MSRP protects profit margins, supports retailer trust, prevents extreme price differences across retail locations and shapes the perceived value of your product in the market.
