It is unfair and shouldn't be allowed .. but it's also not unusual in the 'real' world.
I recently moved to the edge of a very up-market area and when we were getting quotes for things like building work, they were way higher (like double) what they had been for the same work in our previous house in a more average area.
Same thing with quotes from gardeners and cleaners.
You'll also notice that if you go to any up market area, you pay more for most things - a coffee in Starbucks, food at the local supermarket, gas .. Of course, some of that is because the businesses are probably paying higher rents, which is not the case in the virtual world.