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. Gas Guzzler Tax

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

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

    A situation in which a single company or group owns all or nearly ...
  6. Pricing Power

    An economic term referring to the effect that a change in a firm's ...
Related Articles
  1. Getting A Grip On The Cost Of Gas
    Home & Auto

    Getting A Grip On The Cost Of Gas

  2. Why You Can't Influence Gas Prices
    Active Trading

    Why You Can't Influence Gas Prices

  3. What Determines Gas Prices?
    Economics

    What Determines Gas Prices?

  4. Save Money On Summer Bills
    Entrepreneurship

    Save Money On Summer Bills

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center