A GUIDE FOR PRICING STRATEGIES

Geographical Pricing

What is it?

Geographical pricing is the adjustment of prices based on where the buyer is located and it can be part of a dynamic pricing strategy. In the past, geographical pricing was mainly used to cover shipping costs or to account for import or export taxes. However, nowadays businesses use this to account for regional differences in supply and demand curves to accommodate geographical markets better. This has now become more doable than in the past because e-commerce and purchasing products online and from abroad has become much more custom and part of our daily behaviour.

How to use it?

You can use geographical pricing in several ways. This really depends on your use case. Let's give you some examples of how you could use geographical pricing.

Expand to new Countries
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Segment your pricing for different regions
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Undercut competitors in different countries
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THE GAINS

Benefits of geographical pricing

1

Taking shipping costs and VAT and currency differences into account

Shipping costs, additional taxes and currency exchanges can be costly, by having a geographical pricing strategy in place you are able to cover these costs efficiently for different markets.
2

Make entering new markets more scalable

When entering a new market you do not need a new pricing manager to manage your prices according to the specific demographics of that country. You can just add the new demographics of the market in SYMSON and you are ready to go.
3

Enabling different positions in different markets

Internationally operating businesses sometimes have to compete with locally operating businesses. Geographical pricing can improve their marketing and pricing strategy per region with different competitors.
INDUSTRY TRENDS

Who is using it?

B2B companies

As businesses that sell products internationally have a different international departments, often they appoint pricing managers to a certain geographic region. Often these pricing managers do have the freedom to decide on price points for products in their specific market, as long as they reach certain business objectives.

Apple

The tech giant sells its products at different prices in different national markets. This is the case because taxes differ across nations, the higher the tax, the higher the price for customers is. Businesses that sell products in different countries need to consider different tax systems and adjust their prices accordingly.

E-commerce companies

E-commerce companies that are planning to sell worldwide or expand to new markets can do that through their own channels or via marketplaces such as Amazon and other country-specific ones. However, these platforms charge different platform fees per country and have different tax rates and pricing psychology tactics. For example, in the Netherlands, a price of 4.95 is perceived as attractive and in Germany is 4.99.

HOW TO HANDLE THE CHALLENGES OF GEOGRAPHICAL PRICING

The most common challenges pricing managers face today

  • When expanding your services to different regions it can get really complex to manage the different costs for shipping and adding additional ones like VAT and others. If you want to successfully manage your prices for different regions it is important to implement a smart price management solution such as SYMSON to make the pricing process easier.
  • When trying to enter a new market it is important to consider competitors in that specific region or country. This is where price monitoring software like SYMSON can help! By analysing the prices of the most popular competitors you can understand the specifics of the market and price your product or service more accurately.
  • For most companies nowadays the first step in expanding to a new country is to hire a regional pricing manager.  With the smart price management solution, SYMSON expanding to a new country is much more user-friendly and only requires the specifics to be input into the software and with that, all your prices will be adjusted to the regional specifications.
THE DISADVANTAGES

Disadvantages and how to handle them

It complicates accounting

Different prices for the same product complicate the entire accounting process and this should not be underestimated. To still successfully implement geographical pricing, businesses should invest time in making sure the numbers align correctly.

Not allowed in some regions due to regulations

Before you start to change your prices for different markets, you should take regional laws and regulations into account. Some regions have stricter rules than others and sometimes forbid extreme price differences.
HOW TO SET IT UP

How to implement Geographical Pricing

In your organization

Using a geographical pricing strategy is a great way to segment your target groups and adjust the prices towards their specifics, however, it can be time-consuming and complex so we recommend following the following steps in order to make the process as efficient as possible.

Analyse the specifics of the market in different countries/regions
Determine the differences in willingness to pay for your KVIs
Create updated prices for each country or region
Test the new prices with small groups at first
Analyse the first result
If the results are positive you apply the updated prices for all countries or regions

In SYMSON

SYMSON can offer customers different prices based on their location if this data is retrievable. With the help of business rules or the price elasticity of the product per geographic market, the SYMSON pricing engine can offer different prices to customers of different geographic regions. Follow these steps to implement the strategy effectively in SYMSON.

Make a secure data connection with your chosen systems to continuously update prices
Select your geographical regions
Input the region-specific costs such as different VAT rates and shipping costs
Select the products which you wish to offer to these new regions
Create your pricing strategy with the existing pricing strategies in SYMSON
Run the strategies in order to collect relevant competitor and customer behaviour data
Use the collected data in order to optimise your strategies
THE KEY IS A COMBINATION OF STRATEGIES

How to combine with other pricing strategies?

Geographical pricing is best combined with other pricing strategies to optimize prices and increase profits and revenue. Since this pricing strategy is increasingly used today to take advantage of differences in markets in different regions, it is best to combine it with a dynamic pricing model or a competitive pricing model. Utilising a cost-based and price-elasticity on top of the previous strategies can have an even larger effect on margins. These pricing models mainly make geographical pricing more responsive to changes in the market, such as the prices of competitors.
GET A DEMO

How to use Geograhical-based Pricing in SYMSON

How it works
How to combine different pricing strategies
How to get recommendations for the perfect pricing
How to track competitors

Summary

  • Geographical pricing is the adjustment of prices based on where the buyer is located and it can be part of a dynamic pricing strategy.
  • Geographical-based prices are ideal if you want to take shipping costs or currency differences into account and if you want to position yourself differently in different geographic markets.
  • Geographical pricing performs best when it is combined with other pricing strategies such as competitive pricing, dynamic pricing or price elasticity.

The SYMSON Solution

The framework of the Machine Learning and AI module in SYMSON

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