Geographical Pricing

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.

BREAKING DOWN '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. Geographical Diversification

    The practice of diversifying an investment portfolio across different ...
  2. Basing Point Pricing System

    A pricing system in which the buyer pays a base price plus a ...
  3. Basing Point

    A specific location used in the basing point pricing system. ...
  4. Regional Fund

    A mutual fund that confines itself to investments in securities ...
  5. Excluding Items

    The common practice of leaving certain factors out of an overall ...
  6. Oil Price to Natural Gas Ratio

    A mathematical ratio comparing the prices of crude oil and natural ...
Related Articles
  1. Home & Auto

    How Much Money Do You Need to Live in San Francisco?

    Learn how much it costs to live in San Francisco and how the amount varies based on whether you are a student, a professional or an unemployed job-seeker.
  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. Stock Analysis

    Costco Gains as Oil Prices Remain Low

    Understand what oil prices are doing to the economy and how Costco is being affected. Learn whether or not Costco is a good stock to invest in.
  4. Economics

    How Gas Prices Affect The Economy

    At an individual level, higher gas prices mean consumers must pay more at the pump, leaving less for other purchases.
  5. Savings

    3 Ways Low Oil Prices Affect Your Everyday Budget

    Discover the three main ways the historically low price of crude oil can impact your everyday budget, including discounts on your gas, grocery and energy bills.
  6. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  7. Budgeting

    The Adverse Effects of Cheap Gas

    While low gas prices are welcomed, smart budgeters must anticipate future price hikes and consider the impact of low gas prices on investments and taxes.
  8. Investing Basics

    5 Reasons Why Private Equity Investors Like Oil and Gas Companies

    Oil and gas companies may look like a risky industry on the outside, but private equity investors have found reasons to regularly invest in these firms.
  9. Options & Futures

    How Long Can Gas Stay Cheap?

    The current gas prices means a lot for the economy and our pockets. Let's explore how long we can expect gas prices to be low, what affects gas prices, and what changes might be in store.
  10. Economics

    Projected Gas Prices for 2016

    Learn what major authorities on gas prices are predicting for 2016, and about the different factors that can impact the price of gas.
RELATED FAQS
  1. What is the difference between cost and price?

    Consider how cost affects a product's price. Corporate expenses and the current cost of living both impact the final sticker ... Read Answer >>
  2. When diversifying a bond portfolio, you should make sure to take into account all ...

    a. Maturity dates b. Price c. Geographic location d. Credit quality Answer: BCredit quality, time to maturity, and location ... Read Answer >>
  3. What are average operating expenses for the oil and gas sector?

    Learn about the average operating expenses and average operating expenses margin for the oil and gas sector and how they ... Read Answer >>
  4. How does the risk of investing in the oil and gas sector compare to the broader market?

    Learn how the oil and gas sector has risk both with the broader market and the price of oil and gas, and understand how correlation ... Read Answer >>
  5. What impact has the increase in shale gas drilling had on the oil and gas industry?

    Read about some of the domestic and global impacts of the shale oil and gas revolution on the oil and gas industry, particularly ... Read Answer >>
  6. To what extent is the oil and gas sector dominated by a few major companies?

    Discover how the oil and gas industry has become a highly competitive, diverse and global market, and learn why nationalized ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center