Geographical Pricing


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.

Geographical Pricing

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 – [PDF]
  • Money flows like mercury: the geography of global finance – [PDF]
  • Agglomeration in the global economy: a survey of theNew Economic Geography’ – [PDF]
  • Islamic banking and finance: postcolonial political economy and the decentring of economic geography – [PDF]
  • Explaining the spatial variation in housing prices: an economic geography approach – [PDF]
  • The geography of financial literacy – [PDF]
  • The sociology and geography of mortgage markets: Reflections on the financial crisis – [PDF]
  • The remit of financial geography—before and after the crisis – [PDF]
  • Large bank efficiency in Europe and the United States: are there economic motivations for geographic expansion in financial services? – [PDF]
  • Geographically and temporally weighted regression for modeling spatio-temporal variation in house prices – [PDF]