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. Shadow Pricing

    1. The actual market value of one share of a money market fund. ...
  3. Pricing Power

    An economic term referring to the effect that a change in a firm's ...
  4. Gas Guzzler Tax

    An additional tax on the sale of vehicles that have poor fuel ...
  5. Hedonic Pricing

    A model identifying price factors according to the premise that ...
  6. Monopoly

    A situation in which a single company or group owns all or nearly ...
RELATED FAQS
  1. What is the relationship between specialization of labor and opportunity cost?

    The relationship between specialization of labor and opportunity cost is based on the mutually exclusive outcome inherent ... Read Full Answer >>
  2. What are the practical uses for unlevered beta?

    A security's unlevered beta measures the volatility and performance of that security in relation to the performance of the ... Read Full Answer >>
  3. When is it better to use unlevered beta than levered beta?

    It is better to use an unlevered beta over a levered beta when a company or investor wishes to measure a publicly traded ... Read Full Answer >>
  4. What's the difference between economic value added (EVA) and economic rent?

    Economic value added (EVA) measures the performance of a company's management team by comparing operating profit to total ... Read Full Answer >>
  5. How can the problem of asymmetric information be overcome?

    Asymmetric information is inherent in most, if not all, markets. To take a basic example, a patient admitted to a hospital ... Read Full Answer >>
  6. What are some causes of structural unemployment?

    Structural unemployment is a form of unemployment caused by shifts in the economy. It occurs when there is an oversupply ... Read Full Answer >>
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. Economics

    Explaining Marginal Propensity to Consume

    The marginal propensity to consume is a measure of how much consumption changes when income changes.
  7. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  8. Fundamental Analysis

    Explaining Variance

    Variance is a measurement of the spread between numbers in a data set.
  9. Investing Basics

    Understanding Risk-Return Tradeoff

    The essence of risk-return tradeoff is embodied in the common phrase “no risk, no reward.”
  10. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.

You May Also Like

Hot Definitions
  1. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  2. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  3. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  4. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  5. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
Trading Center