When comparing prices as a car buyer you’ll be required to input an MSRP dollar amount and a dealer asking price dollar amount. These amounts are usually provided on the dealers website or other car buying platforms (TrueCar, AutoTrader, Cars.com) and are listed with the vehicle information. If the dealer asking price is not listed you can usually get a quote directly from the dealer by calling. Some dealers may give you a price quote after entering an email address. Once you have inputed the dealer asking price and total MSRP of the vehicle into the Price Setter Widget you will notice that a percent under MSRP automatically generates. This is important because this is the percent that the Price Setter Dealer will be competing against.
Percentage under MSRP is calculated as: % = ( 1 – ( DEALER ASKING PRICE $ / MSRP $ ) ) * 100
Why do we compare based on percent under MSRP and not price? Because this allows for a broader range of comparison. Not every vehicle is made the same way or equipped with the same features, even if they are the same make and model. One dealer may offer the same vehicle with additional factory options compared to the next dealer, so if we compare based on price this may not reflect what you are actually getting compared to the other dealer. It would be like comparing apples to oranges. It’s unfair to the dealers. If we compare based on percent under MSRP you are engaging the dealers to compete on their discounts in relation to the vehicle they are selling, with or without factory options. Discounts under MSRP only include factory options, NOT dealer add-ons. Dealers are restricted from listing cars with dealer add-ons through Price Setter’s database.
Let’s look at an example here. We have two dealers: dealer A and dealer B. Both dealers have the same cars on the lot. They sell Car 1 which has a few factory options equipped (Backup camera, Moonroof, Touchscreen) and Car 2 without any factory options. Car 1 and Car 2 are the same make, model and trim. Obviously Car 1 has a higher MSRP than car two based on these factory options. Dealer A offers a higher discount (4.4%) off the MSRP on this particular make, model and trim than dealer B (3.9%). Price Setter will allow car buyers to make both dealers compete against each other based on discount under MSRP. The buyer can engage the dealer to compete between any combination of cars he prefers, as long as they are the same make, model and trim. Dealer A’s Car 1 can compete against dealer B’s Car 2 and so forth. Remember, it is the percent under MSRP that is being compared, not the price.