Generally available lists (free and those that cost less than a few hundred) are accurate at the country level 90 to 95%, maybe has high as 97% of the time. Reasonable enough for use in basic analytics packages, simple web applications and low volume ad serving. At the state or city level, the shareware lists do much poorer with accuracy ranging from an unusable 60% to a barely acceptable 80%.

Commercial packages which cost substantially more (easily north of $50k annually), have accuracy >99% at the country level and well over 95% at the state/city level. These packages are used in fraud detection, enterprise applications, compliance and high volume ad serving. They can be intentionally fooled, but these scenarios are frequently detectable.

As an aside, I’m not very familiar with IP geolocation. How much better do IP geolocation companies do in determining location versus the generally available lists?