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What is Price Skimming?

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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.
Overview: Price Skimming
Type
Definition
Charging a high price for a new product and reducing the price with time.
Related Concepts

Pricing

This is the complete list of articles we have written about pricing.
Algorithmic Pricing
Bargaining Power
Benchmark Price
Commoditization
Price Fixing
Cost-plus Pricing
Equilibrium
Price Gouging
Customary Pricing
Decoy Effect
Everyday Low Price
Marginal Utility
Willingness To Pay
Dynamic Pricing
High-Low Pricing
Market Value
Flat Pricing
Loss Leader
Predatory Pricing
Price Discrimination
Snob Effect
Market Price
Price Competition
Price Leadership
Premium Pricing
Price Economics
Price War
Revenue Management
Veblen Goods
Price Floor
Price Promotion
Price Sensitivity
Price Skimming
Price Umbrella
Pricing Power
Pricing Strategy
Sticky Prices
Value For Money
More ...
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