Skimming is a pricing strategy where companies set their prices at a high level initially and then gradually reduce them over time. This strategy is often used when introducing a new product or entering a new market.
By initially pricing the product higher, companies aim to capture the attention. As the demand from these customers decreases, the company can then lower the price to attract a broader range of customers. Skimming pricing has several advantages. It allows companies to maximize their profits in the early stages of a product’s life cycle.
It also helps to create a perception of exclusivity and premium value for the product.