Companies do not set a single price but rather a pricing structure that reflect the variations in the changing situations. Price adjustment strategies include.
a. Geographical Pricing A company must decide how to price its products to consumers in different parts of the country. Often geographical pricing is not negotiated but depends upon the traditional practices in the industry in which the firm operates, and all companies in that industry normally conform to the same pricing format. Following are the common methods of geographical pricing.
i) FOB (Free on Board) pricing:
In this type of pricing the buyer selects the transportation form and pays all freight charges. The seller pays the cost of loading the goods (hence free on board). The delivered price to the buyer depends upon the freight charges
Uniform Delivered pricing
The Company charges the same price plus freights to al the customers regardless of their location. The freight charges set at the average freight cost. Here the sellers pay for the freight.
Freight Absorption Pricing: This method calls for absorbing all or part of the actual freight charges in order to get the business. It can be done with the reason that if we are able to get added business from that customer than the average cost would reduce.
Zone Pricing: It falls between FOB origin pricing and uniform delivered pricing. In this type of pricing, goods are delivered at uniform delivered pricing to al the buyers within a geographical zone. In multiple zone system, delivered prices vary by zone.
Basing point pricing: In this method the seller selects a given city as a basing point and charges all customers the freight cost from that city to the customer location regardless of the city from which the goods are actually shipped.
