The term, invoice price, as it relates to car pricing, refers to the wholesale price that car dealers pay for the cars they purchase from car manufacturers. Since all car dealers are independent businesses, they buy wholesale and sell retail like most other businesses.

Simply stated, the difference between invoice price and whatever price a dealer is able to sell his cars for represents his profit. All businesses have to make a profit to pay the bills, salaries, buy more cars, and stay in business.

In reality, dealers can make profit by receiving bonuses, holdbacks, and rebates from the manufacturer that can often allow them to sell cars at prices below invoice price.

Car consumers often think dealers should sell at or below invoice price, which is unreasonable unless the dealers are getting help from their manufacturer. It’s more important to know the current market prices at which cars are being sold. Market price is essentially what other people are paying for each vehicle and takes invoice price and manufacturer incentives into account.

You can see sticker prices, invoice prices, and current market prices on any vehicle make and model at Edmunds. They even give you a low price certificate that will be honored at your local car dealers.