Price Skimming

Price Skimming

• Pricing strategy
• Starts with a high prices and decreases over time
• High price for a short time
• Objective : "skim off" customers who are willing to pay more

Advantages

• Allows for return on set-up costs
• Builds high quality image for high price product
• Effective strategy
• Acquires maximum profit at each market segment
• Main objective - benefit from short-term profits

Disadvantages

• Competitors challenging the seller's extreme price point with
• lower-priced offerings 
• Sales volume, limiting sales
• Annoyed customers, change in price after they have bought it

Examples

• Apple use this strategy
• iPhone 6's (and 6+) prices will slowly decrease
• As well as pricing with iPods and other phones