Zone Pricing Law and Legal Definition
Zone Pricing is a pricing method in which all customers within a defined zone or region are charged the same price. And more distant customers pay a higher price than those closer to the company's dispatch point. It is also called multiple zone pricing. Prices increase as shipping distances increase. This is sometimes done by drawing concentric circles on a map with the plant or warehouse at the center and each circle defining the boundary of a price zone. Instead of using circles, irregularly shaped price boundaries can be drawn that reflect geography, population density, transportation infrastructure, and shipping cost. The term "zone pricing" can also refer to the practice of setting prices that reflect local competitive conditions, i.e., the market forces of supply and demand, rather than actual cost of transportation.