Friday, January 8, 2010

Market skimming pricing

Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price, the company makes fewer but more profitable sales.
An example of price or market skimming can be seen in the computer industry, where technology sets up the environment for this price strategy. A computer manufacturer comes out with a new laptop every 8 to 10 months. The older, unsold models move down in price while the new model laptops with newer features and benefits are in the introductory phase and are able to command a higher price. The computer manufacturer is skimms price and gains the maximum profit through the maximum price.

Reference:
http://ezinearticles.com/?When-to-Use-Price-Skimming-Or-Market-Skimming-As-a-Pricing-Strategy&id=1341511

2 comments:

Syed Ahmad Hashmi said...
This comment has been removed by the author.
Syed Ahmad Hashmi said...

Rightly stated. Laptop manufactures would definately adopt skimming price at first because they have basically a strategy in mind to slowly penetrate a market by skimming off various layers at start.
Nice addition keep it up.