What is List Price?

A list price is the quoted or printed price of a product or service. List prices are stated in a seller's catalogs and sales brochures. The intent of publishing a list price is to stabilize the prices charged by retailers for a manufacturer's products. If all retailers charge the list price, then all parties should earn a profit. If the demand for a product is unusually strong and supply is limited, retailers may even charge a price higher than the list price, and so will earn an inordinate profit on the transaction.

Discounting from the List Price

The list price is the highest price that a customer can expect to pay for a product; net of various discounts, the actual amount paid may be substantially lower. A seller that routinely sells below the list price is classified as a discounter. Customers that buy in volume are typically awarded a volume discount, so that they pay less than the list price.

How to Calculate a Discount

A seller calculates the amount of its discounts from the list price. For example, a company is selling a purple widget for $100, and offers a 10% discount if the buyer acquires at least five of the widgets. The amount of the discount is calculated as the $100 list price, multiplied by 90% and five units, which results in a net price of $450, where the volume discount is $50.