Basing-Point Pricing
Basing-point pricing is a system of establishing prices on goods that includes a transportation cost from a particular city or town in a zone or region even though the shipment does not originate at the basing point. The term also refers to a method of distributing wholesale goods.
Basis Point Pricing Explained
In simple words, “basing point pricing” is using one place as your central location for buying and selling instead of everywhere you trade. In this way you make sure everybody pays the same price wherever they are. It’s been around since ancient times! Isn’t it cool? Check out more of what it really means below!
If several companies have their centers within a limited radius, they may use the same basis point, or base their charges on a common factor, such as mileage. This may result in higher charges to those located further from the center.
This is typically used by large wholesale companies that require different rates for various regions of the country.
The term also refers to a method of distributing wholesale goods. The system involves basing prices upon the shipment’s point of origin rather than its destination, often leading to higher costs for out-of-region shipments. It is frequently employed by manufacturers attempting to avoid price controls imposed by local governments, but it can also be used domestically when sellers attempt to recover transportation costs incurred by regional supply shortages (for example, pockets of inflationary pricing in oil markets). When this occurs, buyers near the source of the goods will pay higher prices than those buying from a supplier further away. The term is used primarily in reference to legal controls and not market forces, although it can be affected by geography and other factors that influence supply, demand, and transportation costs.
Related Links
OECD Glossary of Statistical Terms – Basing point pricing Definition
Basing Point Pricing System
Base point pricing
The Basing-Point Price System (With Diagram)
Basing-point pricing system – Financial encyclopedia
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What is Basing-Point-Pricing ?
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What is Basing-Point-Pricing ?