What is Geographical Pricing?
Geographical pricing is the adjustment of prices based on where the buyer is located. In the past, this was mainly used to cover the shipping costs to a distant location. Now that shipping costs are less expensive, companies use geographic pricing more often for other reasons.
Recently, companies use this to align supply and demand curves and market dynamics in different geographic markets. For example, in some national markets there can be a lot of competition and in other national markets very little. This affects how much a company can get for a product.
Advantages and Disadvantages
Taking geographical differences into account | This method allows you to take regional, national or intercontinental differences into account for shipping costs. This ensures that you can optimize your systems and prizes to make sure that you do not lose any money on shipping.
Taking currency differences into account | With this pricing method you can also take into account different currencies. For example, you can display an amount in british pounds, euros and US dollars to different customers.
Taking price positioning into account | Companies may want to act different in different markets. Because competitors in various markets may vary. With geographical pricing they can easily change their position in a market with different pricing strategies.
Disadvantages | The disadvantages of this method can be that customers close to borders will be duped or that distant customers will go to the competition, due to higher costs.
Geographical Pricing in combination with other Pricing Models
Geographic pricing is best combined with other pricing strategies to maximize profits even better. Since this pricing is increasingly used today to take advantage of differences in markets in different regions, it is best to combine it with a dynamic pricing model or a competitive pricing model. These pricing models mainly rely on competition to determine the pricing of products and or services.
With SYMSON’s pricing software, companies can easily determine whether they turn on geographic pricing or not. In addition, companies can easily combine it with other pricing models and strategies. If you would like to know more, feel free to contact us!
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