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.
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.
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.
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 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.
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.
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.