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Geographical Pricing

Definition

Geographical pricing, in marketing, is the practice of modifying a basic list price based on the geographical location of the buyer. It is intended to reflect the costs of shipping to different locations.

What is 'Geographical Pricing'

Adjusting an item's sale price based on the buyer's location. Sometimes the difference in sale price is based on the cost to ship the item to that location or what the people there are willing to pay. Geographical pricing might result in a California-grown avocado costing less in San Francisco than in Omaha, for example. Companies will try to gain maximum revenue in the markets in which it operates, and geographical pricing enables such practices.

Explaining 'Geographical Pricing'

A type of geographical pricing called "zone pricing" is common in the gasoline industry. This practice entails oil companies charging gas station owners different prices for the same gasoline depending on where their stations are located. The wholesale price, and thus the retail price, is based on factors such as competition from other gas stations in the area, the amount of traffic the gas station receives and average household incomes in the area - not on the cost of delivering gas to the area.


Further Reading


An economic geography of global finance: ownership concentration and stock-price volatility in German firms and regions
www.tandfonline.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Money flows like mercury: the geography of global financeMoney flows like mercury: the geography of global finance
onlinelibrary.wiley.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Agglomeration in the global economy: a survey of theNew Economic Geography'Agglomeration in the global economy: a survey of theNew Economic Geography'
citeseerx.ist.psu.edu [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Islamic banking and finance: postcolonial political economy and the decentring of economic geographyIslamic banking and finance: postcolonial political economy and the decentring of economic geography
rgs-ibg.onlinelibrary.wiley.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Explaining the spatial variation in housing prices: an economic geography approachExplaining the spatial variation in housing prices: an economic geography approach
www.tandfonline.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

The geography of financial literacyThe geography of financial literacy
papers.ssrn.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

The sociology and geography of mortgage markets: Reflections on the financial crisisThe sociology and geography of mortgage markets: Reflections on the financial crisis
onlinelibrary.wiley.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

The remit of financial geography—before and after the crisisThe remit of financial geography—before and after the crisis
academic.oup.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Large bank efficiency in Europe and the United States: are there economic motivations for geographic expansion in financial services?Large bank efficiency in Europe and the United States: are there economic motivations for geographic expansion in financial services?
www.jstor.org [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …

Geographically and temporally weighted regression for modeling spatio-temporal variation in house pricesGeographically and temporally weighted regression for modeling spatio-temporal variation in house prices
www.tandfonline.com [PDF]
For some, global finance is ubiquitous. The growth of advanced electronic communications combined with computer-driven, top-down investment strategies has provided institutional investors access to the most sheltered capital markets, including those of continental …



Q&A About Geographical Pricing


What is geographical pricing?

Geographical pricing is adjusting the sale price of an item based on the buyer's location.

What type of geographical pricing is common in gasoline industry?

Zone Pricing. This practice entails oil companies charging gas station owners different prices for the same gasoline depending on where their stations are located. The wholesale price, and thus the retail price, is based on factors such as competition from other gas stations in the area, the amount of traffic that comes into this station and average household incomes in this area - not on how much it costs to deliver gas to this area.

Why would a company want to adjust their prices based on where they are selling to?

Companies will try to gain maximum revenue in the markets in which it operates, and geographical pricing enables such practices.

How does zone pricing work?

Zone Pricing works by oil companies charging gas station owners different prices for the same gasoline depending on where their stations are located. The wholesale price, and thus retail price, is based on factors such as competition from other gas stations in that area, how much traffic comes into that station and average household income there - not how much it costs to deliver gas there.