Review:
Price Skimming
overall review score: 4.2
⭐⭐⭐⭐⭐
score is between 0 and 5
Price skimming is a pricing strategy where a company sets a high initial price for a product or service and then gradually lowers the price over time.
Key Features
- High initial price
- Gradual price reduction over time
- Targeting early adopters or price-insensitive customers
Pros
- Can help companies recoup initial investment costs quickly
- Attracts early adopters who are willing to pay a premium for new products
- Creates an aura of exclusivity and premium positioning for the product
Cons
- May alienate price-sensitive customers
- Can lead to backlash if customers perceive the initial price as unjustifiably high
- Competitors may undercut prices once the product reaches mass market penetration