geographical pricing

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geographical pricing

the PRICING of products to customers based in different locations. In some cases differential PRICES may be charged to reflect the respective costs of physical DISTRIBUTION involved in moving goods from the factory to the buyer.

In other cases firms may simplify their pricing arrangements by means of a ‘uniform delivered price system'which involves charging the same price to all customers irrespective of their location (for example post office letters). Alternatively, customers may be grouped into a number of delivery zones and a common price charged to all customers in each zone. Such ‘basing point price systems’ involve some cross-subsidization of delivery costs between customers in the interests of maximizing the firm's total sales. See PRICE DISCRIMINATION.