Uniform Delivered Pricing
This article covers meaning & overview of Uniform Delivered Pricing from operations perspective.
What is Uniform Delivered Pricing?
It is type of pricing in which buyer would be able to buy at same price irrespective of its location. Here the seller includes the transportation charges and keeps the price same for all the locations in that zone.
Hence the demand doesn’t get affected by the distance from which the goods are procured. This is also known as single zone price or postage stamp pricing. Most of the time sellers form zones depending upon the location and keeps the price same anywhere in that zone. But different prices may be charged for different zones.
Pricing model which includes shipping and transportation charges.
The seller pays the transportation charges of delivering the product to the customer and accounts for it in the price of the product such that it is same for all customers. In this model, the seller owns the product till it is delivered. There are two types of UDP models:
1. Single-Zone Pricing
2. Multi-Zone Pricing
Single-Zone Pricing: In this type of UDP model, the seller charges all the customers the same delivered price.
Multi-Zone Pricing: In this type of UDP model, geographical areas served by the seller are further divided into zones, depending on the distance from the seller’s dispatch point’s location. Customers in different zones (i.e. across zones) are charged differently but all customers within one zone pay the same delivered price.
For example, if you buy a pair of shoes and it is to be delivered in Dwarka area of Delhi, then irrespective of which sector you’re in, you will be charged the same delivered price, say Rs.50. But if you move to Mayur Vihar area of Delhi and want this pair to be delivered there, then you might be charged differently, say Rs.100 because now you fall in a different zone.
Hence, this concludes the definition of Uniform Delivered Pricing along with its overview.
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