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The pricing decision

6.2 Skimming strategy

A high price is set for the product initially, so that only those who are desperately
keen on the product will buy it.

 Then the price is lowered, making the product more accessible.

 When the next group of customers have had a chance to buy at that price, the
price is lowered again, and so on.

 The aim of this strategy is usually to maximise revenue. But, on occasions, it is
also used to prolong the life of older products.

Heavy advertising

Customers prepared to pay high prices to be ‘one up’

Short lifecycle: development costs need to be recovered quickly

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