Price Skimming

What is Price Skimming?

A pricing method in which a new and differentiated product is launched at a high price aimed at customers willing to pay most for early access, with the price reduced over time as the product becomes less novel or as competitors enter. It recovers development costs quickly and supports a premium image, but it limits early sales volume and the high margin attracts rivals into the market.

This definition is part of the Marketing chapter in Cambridge O Level Business Studies.

Concepts related to Price Skimming

• early adopters
• development cost
• differentiation