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.

There are several types of geographic pricing:

   * FOB origin - The shipping cost from the factory or warehouse is paid by
     the purchaser. Ownership of the goods is transfered to the buyer as
     soon as it leaves the point of origin. It can be either the buyer or
     seller that arranges for the transportation.
   * Uniform delivery pricing - (also called postage stamp pricing) - The
     same price is charged to all.
   * Zone pricing - Prices increase as shipping distances increase. This is
     sometimes done by drawing concentric circles on a map with the plant or
     warehouse at the center and each circle defining the boundary of a
     price zone. Instead of using circles, irregularly shaped price
     boundaries can be drawn that reflect geography, population density,
     transportation infrastructure, and shipping cost.
   * Basing point pricing - Certain cities are designated as basing points.
     All goods shipped from a given basis point are charged the same amount.
   * Freight-absorption pricing - The seller absorbs all or part of the cost
     of transportation. This amounts to a price discount, and is used as a
     promotional tactic.