How to Calculate the Fair Price for a New Car

by Michael Butler

You may have heard that you should never pay the sticker price for a new car because dealers will negotiate a lower price. Often dealers will sell a car for less than advertised but it depends on the car and market conditions. To know when the dealer offers you a fair price for a new car, you need to do some simple calculations.

The MSRP, also know as the sticker price, can be found on the information material on the car window at the dealer.
1

Subtract the invoice price from the manufacturer's suggested retail price (MSRP). The MSRP, also know as the sticker price, can be found on the information material on the car window at the dealer. The invoice price is how much the dealer paid the manufacturer for the car.

Subtract the value of any factory to dealer incentives.
2

Subtract the value of any factory to dealer incentives. Often manufacturers will promise to pay dealers a cash amount for each car sold. The amount varies and you can try asking the dealer for it. Several websites list this information too.

3

Subtract the amount of any customer rebates to arrive at the dealer's actual cost for the vehicle.

Add in profit for the dealer.
4

Add in profit for the dealer. This amount depends on the type of car and the market conditions. In 2010 this was normally anywhere between $500 to $1000. Once you have accounted for dealer profit, you have a fair price for the new car.

Tip

  • check "Fair" is a relative term. What you find fair might not be fair to the car dealer.

Items you will need

About the Author

A professional writer, Michael Butler has been writing Web content since 2010. Butler brings expertise in legal and computer issues to his how-to articles. He has a Bachelor of Arts in English literature from Washburn University. Butler also has a Juris Doctor from Indiana University School of Law, Bloomington.

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