Dealer Invoice & Fair Offer Calculator
Sticker, invoice, and what sits between them
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the sticker price (MSRP) with the options the car actually has, leaving out the destination charge. The destination charge is a fixed pass-through and does not belong in the margin.
- 02
Enter the dealer invoice for the same car and the same options, again without destination. Make sure both figures describe the same build, or the percentages will mislead you.
- 03
Add any dealer cash, the factory-to-dealer incentives on this model. It is not the same as a customer rebate, which comes off later on the out-the-door page.
- 04
Set the profit you are willing to leave the dealer as a percentage above its true cost. The worked example uses 2%.
- 05
Check the holdback rate, which keeps a default of 2%, the low end of Edmunds' typical 2-3%. The page figures holdback on invoice and on MSRP because brands differ. Then read the fair offer and the price ladder beneath it.
Formula
Holdback = holdback rate × invoice (the page also shows it on MSRP). Dealer's true cost = invoice − holdback − dealer cash. Fair offer = true cost × (1 + the margin you choose). The dealer's gross profit at any price = that price − true cost. Discount off sticker = (MSRP − offer) ÷ MSRP.
Example
A car with a $45,000 sticker and a $42,750 invoice, 95.0% of sticker, with $1,000 of dealer cash and a 2% margin. Holdback at 2% of invoice is $855, so the dealer's true cost is $40,895. A fair offer 2% above that is $41,713: $3,287 or 7.3% below sticker and $1,037 below invoice, leaving the dealer $818 against the $4,105 it would make at full sticker. If the brand figures holdback on MSRP instead, holdback is $900 and the offer $41,667. For comparison, the average new vehicle sold 3.4% under sticker in Kelley Blue Book's August 2026 data.
Definitions
- MSRP
- The manufacturer's suggested retail price, printed on the window sticker. A starting point for negotiation rather than a price anyone must pay.
- Invoice price
- What the manufacturer bills the dealer for the car. It includes holdback, so it overstates the dealer's real cost.
- Holdback
- A share of MSRP or invoice, typically 2-3% according to Edmunds, that the manufacturer returns to the dealer after the sale.
- Dealer cash
- A manufacturer incentive paid to the dealer rather than to the buyer, usually to move a particular model. It lowers the dealer's cost and is rarely advertised.
- Destination charge
- The manufacturer's fixed fee for delivering the car to the dealer, the same for every buyer of that model and left out of the margin arithmetic.
Good to know
What the invoice does and does not tell you
Two prices describe every new car. The manufacturer's suggested retail price, the MSRP, is on the window sticker. The invoice is what the manufacturer bills the dealer for the same car. The gap between them looks like the dealer's margin, and for years buyers were told that offering a little over invoice meant a fair deal for both sides. The picture is less simple than that, because the invoice is not what the dealer finally pays. It includes an amount the manufacturer will hand back after the car is sold, called holdback, and it takes no account of incentives paid to the dealer, called dealer cash. Both lower the dealer's real cost without appearing on the invoice. On this page's defaults the sticker is $45,000 and the invoice $42,750, which is 95.0% of sticker and $2,250 below it. That $2,250 is not the dealer's whole margin, and it is not the floor either. Two practical rules make the comparison honest. First, both figures must describe the same car with the same options, because an invoice for a base model set against a sticker for a loaded one produces a meaningless percentage. Second, the destination charge should be left out of both. The manufacturer sets it, it is the same for every buyer of that model, and the dealer earns nothing on it, so including it in one figure and not the other distorts the arithmetic. Add it back when you work out the out-the-door price. With those two rules followed, the invoice is a useful starting point. It is a starting point for working out what the dealer really paid, though, not an estimate of that cost.
Holdback, and why selling at invoice is not selling at cost
Holdback is a percentage of either the MSRP or the invoice price that the manufacturer repays to the dealer after the car is sold. Edmunds describes it as typically 2-3%, and notes that it is already built into the invoice price. The effect is that a dealer can advertise a car at invoice, or even sell slightly below it, and still receive money to cover the costs of running the business. Whether a brand figures holdback on MSRP or on invoice varies, and the two give different amounts. On the default car, 2% of the $42,750 invoice is $855, while 2% of the $45,000 sticker is $900. At 3% of invoice it would be $1,283. Because the basis is a fact about the brand rather than a choice, this page works out both. The headline uses the invoice basis, which is the smaller holdback, so the page never overstates how much the dealer is holding back, and the rate itself defaults to 2%, the bottom of Edmunds' range, for the same reason. The difference between the two bases is usually small next to everything else. On the defaults the fair offer is $41,713 on the invoice basis and $41,667 on the MSRP basis, $46 apart. What matters more is the principle. Holdback arrives after the sale rather than at the moment of the deal, so it rarely feels to the salesperson like part of the deal in front of them. It is still part of the dealership's income from that car. When a dealer says a price is at invoice and there is nothing left, the holdback is the first reason to doubt it. The second is dealer cash.
Dealer cash, customer rebates and other incentives
Manufacturers spend heavily to move cars, and the money reaches the deal through different channels that are easy to confuse. Kelley Blue Book put incentives at 6.5% of the average transaction price in August 2026. Some of that spending goes to buyers and some to dealers, and the two are treated differently on this page for a reason. Dealer cash is paid by the manufacturer to the dealer, usually to help sell a particular model or to clear inventory, and it is rarely advertised to buyers. Because it lowers what the dealer effectively paid for the car, it belongs in the calculation of the dealer's true cost. On the defaults, $1,000 of dealer cash and $855 of holdback bring a $42,750 invoice down to a true cost of $40,895. A customer rebate works differently. It is paid toward your purchase, typically after the price has been agreed, and it does not change what the dealer paid. It belongs on the out-the-door page, where your state decides whether sales tax is figured before or after it comes off. Promotional financing is a third channel. A below-market rate from the manufacturer's finance arm is often offered instead of a rebate, and the rebate versus APR page weighs that choice. Keeping the channels separate protects you from a common mix-up, in which a rebate you were entitled to anyway is presented as a discount the dealer is giving you. The clean sequence is to negotiate the price against the dealer's true cost, then apply any customer rebate, then decide on financing. Dealer cash is harder to find than a rebate because it is not advertised, so ask directly whether any factory-to-dealer incentives apply to the model, and compare what different dealers say.
Setting an offer a dealer can accept
A fair offer leaves the dealer a profit above its true cost, and the size of that profit is the one number this page asks you to choose. On the defaults, 2% above a true cost of $40,895 is $41,713. That is $3,287 or 7.3% below the $45,000 sticker and $1,037 below invoice, and it leaves the dealer $818 on the car, against $4,105 if you paid full sticker. Whether a dealer will accept a margin that thin depends on the car more than on the arithmetic. Kelley Blue Book's August 2026 figures put the average new vehicle at a $50,089 transaction price against a $51,852 average sticker, so buyers paid about 3.4% below MSRP on average. Behind that average, popular models in short supply sell near or at sticker, while slow sellers and outgoing model years sell well below it. An offer far below the market for that particular model will simply be refused, and an offer above it wastes money, so the average is a check on your number rather than a target. Three habits help. Get written quotes from more than one dealer for the same car, because competition moves prices more than argument does. Negotiate the price of the car on its own, before the trade-in, the financing or any add-on enters the conversation, since each of those carries its own profit and a thin margin on the car can be recovered through any of them. And be ready to walk away, which is the only reason any offer has force. The price ladder in the table, from sticker through invoice to the dealer's true cost, shows where your offer sits and how much the dealer keeps at each step, which gives you firmer ground for that conversation.
Frequently asked questions
What is dealer holdback?
A percentage of the MSRP or the invoice price, typically 2-3% according to Edmunds, that the manufacturer pays back to the dealer after the car is sold. It is already built into the invoice, so a dealer who sells a car at invoice still earns the holdback. On the default $42,750 invoice, 2% of invoice is $855, or $900 if the brand figures it on the $45,000 MSRP.
How far below MSRP should I offer?
It depends on the car more than on any rule. Kelley Blue Book's August 2026 figures put the average new vehicle at a $50,089 transaction price against a $51,852 average sticker, about 3.4% below MSRP, with incentives at 6.5% of the transaction price. Popular models sell near sticker and slow sellers well below it. On this page's defaults a 2% margin over the dealer's true cost comes to $41,713, which is 7.3% below the $45,000 sticker.
Can a dealer sell below invoice and still make money?
Yes. Holdback and dealer cash both arrive after the sale and neither shows on the invoice. On the defaults the invoice is $42,750, but after $855 of holdback and $1,000 of dealer cash the dealer's true cost is $40,895. A price of $41,713 is $1,037 below invoice and still leaves the dealer $818.
Is dealer cash the same as a rebate?
No. Dealer cash is money the manufacturer pays the dealer to help sell a particular model, and it is rarely advertised. It lowers the dealer's cost, which is why it belongs in this offer. A customer rebate is paid toward your purchase after the price is agreed. It belongs on the out-the-door page, where your state decides whether the price is taxed before or after it.
Should the destination charge be included?
Leave it out of both figures. The destination charge is set by the manufacturer, is the same for every buyer of that model and is not a source of dealer margin, so including it in one figure and not the other distorts every percentage. Add it back when you work out the out-the-door price.
Why does the page figure holdback on invoice?
Because brands differ, and the invoice basis gives the smaller holdback, so the page never overstates what the dealer is holding back. The difference is usually small: on the defaults the offer is $41,713 on the invoice basis and $41,667 if the brand pays holdback on MSRP, $46 apart.
Is the car's margin the dealer's whole profit?
No. Financing, add-ons, the documentation fee, service contracts and the trade-in each carry their own profit, so a dealer that accepts a thin margin on the car may try to recover it elsewhere. Agree the price first, then read every other line on the buyer's order.