What is duty-free pricing?

Duty free pricing refers to products that haven't had an import duty charged because they are explicitly sold to passengers departing from an airport or port, according to BusinessDictionary.com. These are considered bonded areas.

An import duty as a tax used to raise state revenue, states Investopedia. It is based on the value of the product or the weight, dimensions or other criteria. In the United States, Congress sets duty rates.

Customers also have the option of purchasing duty-free merchandise outside of bonded areas by presenting valid travel documents, such as a passport, states BusinessDirectory.com. However, customers can pick up these items only at the time of departure from the bonded area.