Geographical Pricing

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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.



RELATED TERMS
  1. Integrated Oil & Gas Company

    A business entity that engages in the exploration, production, ...
  2. Value-Based Pricing

    The setting of a product or service's price, based on the benefits ...
  3. Pricing Power

    An economic term referring to the effect that a change in a firm's ...
  4. Hedonic Pricing

    A model identifying price factors according to the premise that ...
  5. Gas Guzzler Tax

    An additional tax on the sale of vehicles that have poor fuel ...
  6. Monopoly

    A situation in which a single company or group owns all or nearly ...
Related Articles
  1. Home & Auto

    Getting A Grip On The Cost Of Gas

    Feeling overwhelmed by rising oil prices? We offer some tips that will save you money.
  2. Active Trading

    Why You Can't Influence Gas Prices

    Don't believe the water-cooler talk. Big oil companies aren't to blame for high prices.
  3. Economics

    What Determines Gas Prices?

    Gas prices are influenced by more than supply and demand. Find out what determines the price you pay at the pump.
  4. Entrepreneurship

    Save Money On Summer Bills

    From lawn care to summer fairs, expenses can skyrocket if you're not paying attention.
  5. Active Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  6. Fundamental Analysis

    Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges.
  7. Economics

    What is a diseconomy of scale and how does this occur?

    Take a deeper look into diseconomies of scale, the economic phenomenon that can make companies less efficient as they become too large.
  8. Fundamental Analysis

    What is the difference between cost of equity and cost of capital?

    Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital.
  9. Economics

    What is backward integration and how does it relate to economies of scale?

    See how a firm can realize greater economies of scale by engaging in backward integration mergers with one or more of its suppliers.
  10. Economics

    How do economies of scale work with globalization?

    Discover how globalization can lead to unprecedented economies of scale for firms across the world, leading to higher global efficiency and productivity.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center