price skimming

• When is pricing skimming used?

  When launching a new product
• Why is the price set high?

  To create high profits and maybe pay back the research and development costs
• When is the price reduced ?

  When competitors enter the market
• Give 2 benefits of price skimming?

  High starting price can establish an upmarket image

  Can be a great way to harvest high profits from early buyers - innovative products
• Give 2 drawbacks of price skimming?

  Cheaper limitations of the product

  Risky - people will purchase when cheaper