What are the differences between skimming and penetration pricing strategies?

What are the differences between skimming and penetration pricing strategies?

Skimming pricing involves setting a high price initially and lowering it over time, while penetration pricing sets a low price to attract customers quickly.

Can you give me examples of products that use these strategies?

Sure! New tech gadgets often use skimming pricing, while subscription services might use penetration pricing to gain market share.

What are the advantages of each pricing strategy?

Skimming can maximize profits from early adopters, while penetration can quickly build a customer base and increase market share.

Are there any risks associated with these strategies?

Yes, skimming can lead to losing customers to competitors, and penetration can result in lower profit margins initially.

Which strategy is better for a new product?

It depends on the market and product type. Skimming works for unique products, while penetration is better for competitive markets.