What is skimming pricing and how does it compare to other strategies?

What is skimming pricing and how does it work?

Skimming pricing is a strategy where a company sets a high price initially and then gradually lowers it. It's often used for new products.

How does skimming pricing compare to penetration pricing?

While skimming pricing starts high to maximize profits from early adopters, penetration pricing sets a low initial price to attract a large customer base quickly.

What are the advantages of using skimming pricing?

Advantages include recovering development costs quickly, targeting early adopters, and creating a perception of high quality.

Are there any disadvantages to skimming pricing?

Yes, disadvantages include potential market alienation, attracting competitors, and the risk of not sustaining high prices long-term.

Can you give examples of products that use skimming pricing?

Sure! Technology products like smartphones and gaming consoles often use skimming pricing when they launch.