In the context: restaurants set different prices for their food items based on the location
Restuarants set prices varying by location.
Restuarants set prices varying based on location.
Please check these sentences. Especially, "varying " "by" and "based on".
You have three ways to do this. Restaurants set prices ... which vary by location.
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You have three ways to do this.
Restaurants set prices ...
... which vary by location.
... based on location.
... by location.
Of these, I prefer "based on location", but all three are correct.
CJ