Why is it good to be an Agricultural Economist?

Why is the pricing of the digital edition of the Economist location-dependent?

• It make sense with the print edition. In addition to the variable costs of printing and circulation, it has a greater share of revenue from advertising, unlike the digital edition (see ). Is the pricing of the digital edition mainly a function of how much people in different locations are willing to pay?

• Answer:

  Yes, one of the pricing strategies is to make the product available to the customers at the price that they are willing to pay, which is called differential pricing or geographical pricing(fixing different prices based on their location). Since the company wants to tap the potential markets and expand its territory it comes up with  low priced editions depending upon the spending capacity and willingness of local consumers. A classic example would be books of foreign authors being sold in India. The price of the book in dollars or euros if converted to its rupee equivalent will be much higher than the actual rupee price at which its made available to the consumers. A slight variation arises in the price for different cities or countries for the same product ,even because of variations in transportation and distribution costs. Ultimaltely, the marginal revenue should exceed the marginal cost of selling the additional products thereby resulting in greater profitability or the company should atleast break-even. This practice is becoming common as the companies have realised that its not high selling price that can always result in greater profitability but even at a reasonable selling price, by increasing sales substantially, greater profitability can be achieved.