What are geographic pricing strategies?
Geographical pricing is a practice in which the same goods and services are priced differently based on the buyer’s geographic location. The difference in price might be based on the shipping cost, the taxes each location charges, or the amount people in the location are willing to pay.
How many types of geographic pricing are there?
Fundamentally, there are two types of geographic price structures: (I) point- of-origin prices and (2) destination prices. The first type is known variously as f.o.b. point-of-origin, f.o.b. shipping point, and f.o.b. mill prices.
What is geographical price discrimination?
Geographical Price Discrimination: Under geographical price discrimination, the monopolist charges different prices in different markets for the same product. It also includes dumping where a producer may sell the same commodity at one price at home and at the other price abroad.
Why is geographical pricing important?
When pricing, a seller must always consider the costs of shipping goods to the buyer. These costs grow in importance, as the freight becomes a larger part of total variable costs – quantity, weight and distance from seller will generally increase shipping costs considerably.
What is meant by geographic pricing give examples of any two types of geographic pricing?
a pricing method in which customers bear the freight costs from the producer’s location to their own; examples of geographical pricing include FOB pricing, base-point pricing and zone pricing.
What do u mean by pricing?
Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business’s marketing plan. The needs of the consumer can be converted into demand only if the consumer has the willingness and capacity to buy the product.
What is the primary consideration for geographical pricing?
What are the advantages of geographical pricing?
Geographical pricing offers the advantage of allowing you to earn more in certain situations. This is disadvantageous, because it adds extra layers of bookkeeping, because you need to keep track of different prices in different places.
What do you mean by a price point?
The price point is an item’s retail price. The term “price point” is used in several related ways in the world of economics. All of the uses revolve around the retail price which is charged for an item, and the way in which consumers interact with this price.
How is point of production pricing used in geographic pricing?
Point-of-Production Pricing In a widely used geographic pricing strategy, the seller quotes the selling price at the point of production and the buyer selects the mode of transport and pays all freight costs. Usually referred to as FOB factory pricing, this strategy is the only one in which the seller does not pay any of the freight costs.
What do you mean by low price range?
Low priced merchandise. This price range includes samples, close-outs, discontinued, previous season and irregulars. Also know as: Discount. Retailers include: T.J. Maxx, Marshalls, Burlington Coat Factory. This is the lowest price classification in which one would find advertised brand names.
What are the advantages and disadvantages of geographic pricing?
Advantages: Easy to calculate, a fair method of charging and maintains an advertised price for every zone. Disadvantages: Customers on borders may suffer and distant customers can switch to competitors. To penetrate distant markets, a seller may be willing to absorb part of the freight cost.