Zone Pricing

Does your company operate in multiple cities? Implement fully-automated zone pricing to immediately increase your profits and sales.

What is zone pricing?

Zone Pricing is a pricing approach that takes every location as a different market, requiring a tailored pricing strategy.
The local pricing strategy considers the location's unique characteristics:

Consumer demand patterns,
Competitive landscape and competitors' pricing behavior,
Your company's target in that region, such as increasing market share or maximizing profits,
Inventory turnover, stocks in local warehouses, costs, delivery dates, and supplier conditions,
A roster of suppliers in each region, various supplier selection scenarios, and diverse methods and formulas for cost price calculation
The role of items in consumers' baskets, including Hard and Soft KVIs and profit drivers.

As locations, various cities, towns, city districts, parts of a country, or countries can be considered.
Zone pricing is also known as Localized pricing, Location pricing, Geographical pricing.

What companies leverage zone pricing

Generally, Zone Pricing is essential for:

● store chains operating in multiple cities, including multichannel ones,
● e-commerce stores that deliver goods across various geographic zones (such as cities, regions, or countries), including those with warehouses only in their headquarters city.

What do companies achieve with zone pricing?

A tailored pricing strategy for each location, considering the local environment, significantly enhances business outcomes, including gross profit, revenue, and margin. Results are dependent on the company's specific circumstances and its target in the local markets.

Without zone pricing, a retail company experiences customer and profit losses:

1) The company loses profits on certain products.

The company loses profits on certain products.
Retailer X calculates the price of a product based on Milan, where they face large competitors employing a low-price strategy.
The retailer's price is €100, which ensures optimal sales levels and profits in Milan.
In Venice, where Milan's competitors do not operate, local competitors have an average price of €130 for this product.
Retailer X maintains a €100 price, resulting in high revenue. However, with a €125 price, Retailer X would achieve the same sales volume, and €125 would still be the most competitive price in Venice.

Consequently, Retailer X forfeits a €25 profit on each item sold in Venice.

2) The company loses sales and customers on other products.

Example:
Retailer X calculated a €100 price for a product, ensuring optimal sales levels and profits in most geographic zones.
A major retailer enters the Milan market and rapidly expands its market share. In their Milan stores, the same product costs €95, and the competitor initiates a large-scale advertising campaign.

Result:
Retailer X loses sales and customers in Milan as consumers shift to the new competitor.

Utilizing the unique characteristics of a specific region for each product segment, brand, and even individual product, you will be able to:
● For a portion of SKUs, increase margins without reducing sales,
● For the other part of the assortment, boost sales or halt sales decline.

With Imprice, your pricing specialist can effortlessly manage this pricing process for any number of cities.

Our clients' average results from zone pricing implementation:

Number of orders growth

Average Order Value growth

Revenue
growth

Gross margin
growth

A suggestion:
Combine zone pricing with performance marketing optimization. For instance, utilize regional feeds in PPC advertising to directly incorporate zone prices into your local ads, particularly for KVIs.

CASE STUDY

Zone Pricing

Leading optical retailer implemented Zone Pricing approach and increased sales by 32% with Imprice

Read the full story

How zone pricing works with the Imprice platform

● Imprice calculates optimal prices for your stores in each region.

● Pricing rules consider your strategy in a specific region, regional competitors' activities, other vital factors and constraints.

● When significant factors change, the platform automatically recalculates prices, uploads them to your website and ERP System, and sends them to your stores. The minimum interval for recalculating prices is every 10 minutes.

● Your company maximizes business results every minute, in each region, for each item, brand, product group, gaining all possible profits and sales.

With our agile pricing tools, you can automate any pricing rules, consider any business constraints and optimize your pricing at the region- or even store-level.

Examples of tailored pricing needs you can implement with Imprice effortlessly

— It's evident how to initiate zone pricing for two or three cities. What if we have stores in 40 cities and towns?

— And we are operating in a hundred locations.

— And our chain encompasses nearly 800 locations. We don't know the market factors of every small town.
With Imprice, setting up zone pricing rules takes less than an hour.
Example:
iYou have set up the optimal pricing for Milan; it considers Milan competitors' activities and other important factors. Imprice recalculates prices every 10 minutes.

Your stores are also located in Rome and 40 midsize communes.

● For Rome, you set up zone pricing, considering all vital city-specific details.
In just two clicks, copy the rules from "Milan prices" to "Rome prices" and modify them as needed.

● For midsize communes, you implement a simplification.
You set prices for a commune N as a formula based on Milan's prices with the necessary adjustments: markdown or markup, set as a percentage or fixed amount.
For example,
Commune N's price = Milan price + % markup to compensate for logistic costs in N.

Setting up zone pricing for all 40 communes this way takes less than an hour. Your company immediately starts to gain additional profits or increased sales.
— I adjusted the pricing in Milan according to our main competitors' prices!
However, these competitors are not present in Munich.
In Munich, a local chain competes with me, but only half of our SKUs overlap in our assortments.
Great!

1. Set up Munich competitor's prices collecting by Imprice or by integrating Imprice and your competitors' prices vendor.

2. Create a new price type in Imprice, "Munich price".

3. For items that your competitor has in the assortment, in two clicks, copy pricing rules from "Milan Price" to "Munich price".
In these rules, change the "top competitors": remove Milan competitors, put the Munich one.

4. For items without competition in Munich, use other parameters for the price calculation.
For example, it can be equal to Milan price +% markup for logistics. Another option is AI pricing based on demand sensing.

The setup is complete.
If you've launched automatic loading of the Munich competitor's prices into Imprice, all zone pricing settings take no more than an hour.
— In Amsterdam, I sell part of SKUs from my warehouse, and when it's out of stock, from the warehouse of a local supplier partner.

The prices this partner offers me are higher than my cost price. During promotions, sometimes our company doesn't have time to track changing our warehouse to partner's, so we sell with losses.
Such losses are easy to avoid.

1. Set up automatic loading of partner prices into Imprice. Set up pricing rules for Amsterdam.

2. Complete! When a warehouse changes, Imprice will automatically recalculate prices considering the new cost prices and the minimum allowed margin.

If you have several partners with the same SKUs, Imprice will automatically select the best offer according to the criteria you specify: price, delivery time, stocks.

Talk to Imprice pricing experts:

+39-02-82955-708