Price Skimming

This article talks about Price Skimming, where is a product pricing strategy by which a firm charges the highest initial price that customers will pay. It is often used for the launch of a new product which faces little or now competition – usually due to some technological features. Price skimming strategy is to capture the consumer surplus early in the product life cycle in order to exploit a monopolistic position or the low price sensitivity of innovators. As a strategy price skimming cannot last for long, as competitors soon launch rival products that put pressure on the price.