Zone pricing

Definition (1):

Zone pricing is a geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price. For example, Peerless might set up an East Zone and charge $100 freight to all customers in this zone, a Midwest Zone in which it charges $150, and a West Zone in which it charges $250. In this way, the customers within a given price zone receive no price advantage from the company. For example, customers within a given price zone receive no price advantage from the company. For example, customers in Atlanta and Boston pay the same total price to Peerless. The complaint, however, is that the Atlanta customer is paying part of the Boston customer’s freight cost.

Definition (2):

Zone pricing refers to -“The process of setting prices for goods or services based on the location where they will be offered for sale to consumers.” While using zone pricing, generally, a business keeps the prices to distributors constant within a specific zone but will raise the prices within zones that are further away from its production facilities to cope up with the higher transportation costs.

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