Price Adjustments: Geographic Pricing
Products requiring marketers to pay higher costs that are affected by geographic area in which a product is sold may result in adjustments to compensate for the higher expense. The most likely cause for charging a different price rests with the cost of transporting a product from the supplier’s distribution location to the buyer’s place of business. If the supplier is incurring all costs for shipping then they may charge a higher price for products in order to cover the extra transportation costs. For instance, shipping products by air to Ga wader may cost a Lahore manufacturer a much higher transportation cost than a shipment made to karachi.
Transportation expense is not the only cost that may raise a product’s price. Special taxes or tariffs may be imposed on certain products by local, regional or international governments which a seller passes along in the form of higher prices.
4 comments:
When I's a child I failed to understand why a simple thing has different prices in different place. Things are not that simple. It is this knowledge that delivers us from the fetters of this world... Just a thought :)
I think that if the producer will charge more for a product because its transportation cost is high, it may decrease the sales of the producer because other local producers may be selling the same product at a low price. So, what do you say about this?
Hassan's point is very true so in order not to decrease the sales and not to sell the product at a low price as compared to other local sellars , we must try to sell our products within our own geographical range.Why to sell the product in some other geographical range if we r getting good price in our own country?
May be it is true but what about Gourmet.They r expanding their business in all cities of pakistan.
what do they do they dont have their production units in other cities but why they r doing so.Still expandin business n getting a large amount of profit.
so my point is the good will.if u r giving a good quality to the customers n have a good name in market then u can increase price due the factors mentioned above n even then customer will be ready to pay u more.
Its due to ur image nd goodwill.
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