I recently found a car that a distributor sells cheaper than the official company. How can the distributors in genral afford this decision financially?
In: 69
Generally the price “from the manufacturer” is the MSRP or manufacturer suggested **retail price**, meaning they expect a customer could buy one of them for that price.
This does not mean when the distributor gets it from the manufacturer in large quantities (wholesale) they pay that much.
In reality they pay the manufacturer less than the suggested retail price, and the expectation is they can sell at the suggested price and make a significant amount of profit. However they might choose to make less profit per-unit by selling at a lower price, but selling more of them, therefore still making a large profit. Or they might find the item isn’t as popular as they hoped and people won’t buy it at the MSRP, and they need to sell it lower, potentially losing a little money, just to get back some of the money they originally spent on their unprofitable inventory.
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