Zone Pricing
a pricing method in which all customers within a defined zone or region are charged the same price; more distant customers pay a higher price than those closer to the company's despatch point. Also called Multiple Zone Pricing. See Geographic Pricing. | ||||
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Zone Pricing Definition from Encyclopedia Dictionaries & Glossaries
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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 (Free on Board origin) - The shipping cost from the factory or warehouse is paid by the purchaser. Ownership of the goods is transferred 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. (The term "zone pricing" can also refer to the practice of setting prices that reflect local competitive conditions, i.e., the market forces of supply and demand, rather than actual cost of transportation.)
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