Invoice price is the amount a product reseller paid to acquire a product. List price is the amount the reseller charges for the product when promoting it to his customers. These concepts are often used together in discussions of negotiation where buyers strategize how to get a seller to reduce the list price closer to the invoice price.

Invoice Price Basics

When a distributor or retailer purchases products from a vendor, an invoice lists the quantity of each product ordered, the unit price and the total. The invoice price includes the specific line item amount for each item as well as the total invoice price. The total is what the reseller pays for the inventory. The unit price is used as the cost of goods sold amount for each item.

Discounts

Vendors commonly offer product resellers seasonal or quantity discounts or rebates on purchases. These amounts are typically deducted from rate sheets and reflected on the invoice. For example, a retailer may receive an invoice for 24 units of a product at $5, for a subtotal of $120. However, he gets a 10 percent discount for buying a case, which knocks $12 off the total invoice and 50 cents off the per unit price. This improves the cost basis per unit, which is an incentive to buy more products at once.

List Price

List price is the quoted price offered by a manufacturer to a wholesaler or retailer, a wholesaler to a retailer, or a retailer to consumers. It is also known as the sticker price or regular price. The list price on a given product is usually in line with a company's overall pricing strategy. Some companies set list prices with modest mark-ups over invoice price to attract a large customer base. Others set premium prices with significant mark-ups to optimize profit margins with high-end products or upper-income customers.

Negotiations

While there are numerous pricing strategies, they generally fall into two categories -- fixed or dynamic. Fixed pricing strategies mean the list price is the final price paid by all customers. Dynamic pricing means prices can fluctuate over time, or per customers. For example, retailers often offer sales discounts on list prices to convey better value and to induce more sales. Additionally, dynamic pricing is used to change list prices on certain services like airlines and hotels. The list price on flights changes daily or weekly based on available capacity and demand for seats at certain price points. Dynamic pricing models may also lead to negotiations, such as with cars, where buyers attempt to get a reduction on list price.