Geographical pricing

FOB pricing is utilized by larger businesses capable of arranging their own logistics and marketing intermediaries.

This amounts to a price discount, and is used as a market expansion tactic by the companies with high fixed costs.

Instead of using circles, irregularly shaped price boundaries can be drawn that reflect geography, population density, transportation infrastructure, and shipping cost.

[2] Zone pricing, as practiced in the gasoline industry in the United States, is the pricing of gasoline based on a complex and secret weighting of factors, such as the number of competing stations, number of vehicles, average traffic flow, population density, and geographic characteristics.

Many businesspeople and economists state that gasoline zone pricing merely reflects the costs of doing business in a complex and volatile marketplace.

The quoted price includes the freight fees from the basing point closest to the customer (not necessarily being the place the product is actually shipped from).