|Overview: Price Skimming|
|Definition||Charging a high price for a new product and reducing the price with time.|
|Related Concepts||Price DiscriminationPrice Sensitivity|
What is Price Skimming?
John Spacey, January 10, 2016 updated on January 13, 2023
Price skimming is the practice of charging a high initial price for new product or technology. It is a pricing strategy that is designed to quickly recover research and development investments by charging early adopters of a new product a higher price. Early adopters of a product are typically loyal customers and fans who may be willing to pay a higher price to be first. When it comes to new technology, early adopters are often enthusiasts who are willing to pay more for cutting edge technology in a particular area.Price skimming often starts with a high price that may only appeal to a small percentage of customers. The price is then reduced gradually until the price appeals to a firm's entire target market.
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