Zone pricing
Zone pricing is a pricing strategy used by businesses to charge different prices based on the location or zone of the customer. This strategy takes into account factors such as supply and demand, competition, and the willingness of customers to pay based on their location.
For example, a company may offer different prices for their products or services in urban areas compared to rural areas. This is because customers in urban areas may have higher income levels and be willing to pay more for convenience, while customers in rural areas may have lower income levels and be more price-sensitive.
Zone pricing can also be used in online retail, where shipping costs are calculated based on the distance between the warehouse and the customer’s location. Customers closer to the warehouse may be charged lower shipping costs compared to customers farther away.
Overall, zone pricing allows businesses to maximize their profits by tailoring prices to different customer segments based on their location.
Benefits of zone pricing:
- Maximizes profits by charging higher prices in areas with higher demand
- Attracts price-sensitive customers in areas with lower demand
- Helps businesses stay competitive in different markets
For more information on zone pricing, you can visit Wikipedia.