Uniform-delivered pricing

Definition (1):

Uniform-delivered pricing refers to a geographical pricing strategy where the company charges the same price plus freight to all customers, whatever may be their location. The company sets the freight charge at the average freight cost. Uniform-delivered pricing is the opposite of FOB pricing. Suppose this is $150. Uniform-delivered pricing, therefore, results in a higher charge to the Atlanta customer (who pays $150 freight instead of $100) and a lower charge to the Compton customer (who pays $150 instead of $250). Although the Atlanta customer would prefer to buy the paper from another local paper company that uses FOB-origin pricing, Peerless has a better chance of winning over the California customer.

Definition (2):

Uniform-delivered pricing is a pricing strategy where buyers can purchase at the same price irrespective of their location. Under this pricing strategy, the seller adds transportation costs and maintains the same price for each location in that zone. Thus the demand is not get influenced by the distance from where the goods are obtained. It is also called postage stamp pricing or single-zone pricing. The sellers mostly build zones based on the location and maintain the same price anywhere in the given zone. But various prices can be charged for various zones.

Uniform-delivered pricing can be of two models such as:

  • Single-Zone Pricing: Under this pricing model, the seller charges the same delivered price for all the customers.
  • Multi-Zone Pricing: Under this pricing model, geographical areas are again divided into zones, based on the distance from the location of the seller’s dispatch point. Customers in various zones are charged in different ways but all customers within the same zone are charged the same delivered price.
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