Definition of Price Skimming. Description.
Price Skimming is a market-based approach to pricing wherein
a high price is charged in initial market maturity stages to ' cream off the
market'. Prices are set high in order to attract the least price-sensitive
customers and to generate profit quickly, before competitors enter the market
and start to force price erosion.
It is an attractive strategy for small, highly innovative
companies with a new and unique product. Prices can and should be lowered
after the cream has been skimmed. An associated advantage with this pricing
method is its contribution to building the value of a brand or of the reputation
of a firm. The method is also useful for prestige products and in general
for products where demand is relatively inelastic (customers are not very
price sensitive).
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Overview of Pricing and Pricing Strategies
Pricing...
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Compare with: Product
Life Cycle | Marketing
Mix | Promotional
Pricing | Competitive
Pricing | Discount
Pricing | Cost-plus
Pricing |
Standard Cost Pricing |
Marginal Cost Pricing
| Target Pricing
| Penetration Pricing
| Psychological Pricing
| Perceived Value
Pricing
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Special Interest Group Leader
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