Regional pricing is a practice when companies apply different prices to their products in different countries. It is a common strategy for a lot of online commerce firms.
Regional pricing applies for average consumers as well as for commercial firms. Usually, ordinary internet users encounter regional pricing when they search for cheaper plane tickets, or purchase online games, and electronic software distribution, while, for instance, businesses most notably experience this in the medical device industry.
Sometimes the prices vary seemingly only a little, but sometimes the prices can be significantly higher.
Why do companies practice regional pricing
Businesses have been adjusting prices based on location for a long time. This happens due to many reasons, most common reasons for regional pricing policies are:
- Regional laws
- Different taxes
- Different currency exchange rates
- Local sales trends
How does regional pricing work
Each device on the internet has its unique series of numbers called an Internet Protocol address (known as ‘IP address’). Your laptop, phone, and each device connected to the internet have one.
Although your IP address is not significant on its own, to some extent, it is possible to know the geographical location of your device. This is how a site ‘knows’ from which country you are accessing.
Then, website administrators apply geo-blocking based on this information. Hence, regional pricing is implemented.
Bypassing regional pricing
Bypassing regional pricing can be achieved by changing your actual IP address and selecting a country where your desired good or service is cheaper. This can be quickly done when connected to a VPN service. After you choose a virtual location from VPN server list, you will appear to be accessing the website not from your actual location, but from the selected country.
Moreover, when you use a VPN, your true digital identity is hidden, and your internet traffic is encrypted.
Does bypassing regional pricing have downsides
There is a downside of bypassing regional pricing if the usage of tools for such practices are abused. For example, in 2013 India lost their regional pricing, and since then they have had to pay full EU/US prices for their online games.
In the country where minimum wages are several times lower than in EU/US, dramatic price hikes really affected India’s gamers’ community.
Is bypassing regional pricing legal
Because regional pricing is directly related to geo-blocking, the legality of getting around it is unclear and varies by country.
In the European Union, some forms of geo-blocking are illegal. Companies are not allowed to discriminate against consumers based on their location while online shopping for specific services. To learn more about the legality of bypassing regional pricing, click here.