Standardized prices across all countries seem not feasible for many companies, as customer preferences, competitive conditions or cost structures vary from country to country. The price corridor represents a compromise between a standardization of prices across all markets and country-specific price differentiation. The price corridor determines the price differences between the individual countries in such a way that reimports, and grey markets appear as unprofitable as possible.
When determining country-specific prices, aspects such as price elasticity, market size, cost structure, but also competitive conditions must be taken into account. The definition of a price corridor requires centralized pricing in order to avoid decentralized sales organizations with individual pricing.