Pricing ceiling is a pricing technique used by companies to set a high price for a product or service, typically in the early stages of its market introduction. This strategy aims to leverage the initial demand from customers willing to pay a premium price due to innovation, perceived quality, or other distinctive features of the product.
Pricing ceiling allows companies to maximize profits by capitalizing on high-end market segments and quickly recovering the costs of product development and launch.
Over time, the price can be gradually reduced to reach a broader audience and increase sales volumes. Pricing ceiling is often employed in technological or luxury industries, where exclusivity and high initial demand can justify a premium price.