Question


NazoGirl

Is there a specific business term for "setting different prices based upon location of the store"?

first of all, I wonder if there's any specific terms for "setting different prices of the same product based upon the location and rental cost of the store." also, if anyone can list out the advantages and disadvantages for using such pricing method. For example, if a bagel shop plans to set higher prices for its bagels in stores with a higher rental cost; and lower prices for the same type of bagels in the suburban areas, what would be some pros and cons for this action that people can argue? what I have so far is that: it's not an good idea to set different prices because it will lose customers since people expect to be treated fairly regardless of where they live.

1 month ago - 4 answers

Best Answer

Chosen by Asker

Hi NazoGirl Each store can set it's own price according to factors specific to that location for example higher or lower overhead (rent payroll, property taxes etc). If the locations are close together, customers will soon discover the price difference and may react by gravitating to the location with lower prices. Placing a sign in each store advising customers that your prices vary by location is wise. You might consider averaging the retail price by taking the overhead of the total operation as your base for adding markup. Finally, it is not uncommon for retaiI chains to price merchandise in high rent locations higher. An office worker in an office tower in downtown Toronto likely understands that a bagel in the work place is more costly to buy than at the neighborhood store in a Pickering Plaza where they live. If they like the product, they will likely pay a premium for the convenience of having access at work. I hope this is helpful Fred Norman

Source(s)

Many years of retail management experience.

by Fred

1 month ago

Asker's Rating: 

Other Answers

It's called marketing.

by sangiorgio2003- 1 month ago

Price Discrimination - as it is charging a higher price for the same product, and discriminating by location.

by TheMeow- 1 month ago

Differential pricing or price discrimination

by Penelope- 1 month ago