market skimming pricing

  

Definition

An approach under which a producer sets a high price for a new high-end product (such as an expensive perfume) or a uniquely differentiated technical product (such as one-of-a-kind software or a very advanced computer). Its objective is to obtain maximum revenue from the market before substitutes products appear. After that is accomplished, the producer can lower the price drastically to capture the low-end buyers and to thwart the copycat competitors.

Use this term in a sentence

  • Apple normally uses market skimming pricing because they tend to price their products high to achieve maximum revenue before competitors enter into the market with similar products.

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