Basing-point pricing
Basing-point pricing is a pricing strategy where the cost of a product is determined based on a specific geographic location, known as the basing point. This strategy takes into account the transportation costs associated with delivering the product to different locations.
For example, a manufacturer may set a basing point in a central location and calculate the cost of the product based on the distance from that point to the customer’s location. This ensures that customers closer to the basing point pay less for the product, while customers farther away pay more to cover the additional transportation costs.
One of the advantages of basing-point pricing is that it can help manufacturers compete in different regions without having to constantly adjust prices. However, critics argue that it can lead to price fixing and anti-competitive behavior.
Overall, basing-point pricing can be an effective strategy for companies looking to manage transportation costs and pricing variations across different regions.
For more information, you can visit the Wikipedia page on Basing-point pricing.