Chris decided to buy a new automobile and gathered information about the purchase price.
The manufacturer's website show a "list price" of $50,000 which includes your preferred options: leather trim & CD Player. Chris also consulted the "Blue Book" guide to car prices & found that the average price paid for a similar vehicle is $40,000. However the guide also indicate that recent selling prices have ranged from $30,000 to 60,000.
Which price quote, the "list price" or the "Blue Book" average price is the most relevant to Chris decision? Why?
Which price quote is the more reliable one? Why?
At least in the United States, neither of these would be completely reliable.
The manufacturer's website would give the list price, but it would not reflect all the costs that would be added on by the dealer. It would not list such things as the transportation fees and any other things the dealer might have added on.
The blue book refers only to average prices but says nothing about the exact car or the price at the dealer where Chris will buy the car. It also has such a large price range as to be useless.
Of these two sources, Chris ought to start with the list price. He should look at that as a high end price and hope to get the car for a bit less (if it's the exact same car).
The list prices given out by manufacturers are frequently the retail price recommended by the companies, but dealers or retailers are usually free to offer some discount over the list price. It is not common for dealers to for dealers to charge prices more than the list prices unless the additional prices are charged on account of services or accessories provided which are not covered by the list price.
The wide variation in prices ($30,000 to $60,000) reported in Blue Book, is most likely to be due to the dealer discount as well as variations in list prices itself from time to time. For Chris, both the list price and blue Book prices are important in for comparing prices of different models of cars and the likely range of negotiation in finally purchasing a car. But information from these two sources is not sufficient for making a purchase decision. Chris must obtain firm quotation one or more dealers to find out the maximum price he may be charged. After that, if required, he can try to negotiate the prices down.