List Price Vs. Trade Price

List price is another name for manufacturer's suggested price.

The list price is the manufacturer's suggested retail price or sticker price for a good. List price is what a retailer would charge the public to purchase an item. Trade price is what a wholesaler charges a retailer to purchase a good.

List Price

The difference between the cost to manufacturer a good and the list price equals the gross profit that a retailer expects to make on any given item sold to the buying public. Depending on the demand for a good, the wholesaler and the retailer can set the selling price above or below the list price.

Trade Price

At the retail level, trade price is what a business pays to buy a good from another business. The retailer then in turns sells the good at a higher price to the consumer.

Significance

Retailers and wholesalers receive a discount from the manufacturer for buying in bulk. Bulk discounting gives the manufacturer leeway when determining the list price of a good. If a good is in high demand, but in limited supply, a higher list price can be set. A lower suggested retail price can be set for a good whose supply is plentiful and in limited demand.

Trade price can also mean the price at which an investment is bought and sold. Securities in the open market reach a specific price point; the reaction in the market is either positive or negative. Trades are made on the highs and lows of investments in the securities market.

References

• Know This: Price Adjustments: Trade Allowances
• Principles of Accounting: Special Issues for Merchants
• Lending Tree: List Price, More About List Price
• Investopedia: Trade Price Response Definition