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What is a Price-Skimming Strategy?

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Question ajoutée par Vinod Jetley , Assistant General Manager , State Bank of India
Date de publication: 2014/11/14
padmakumar pathiyil
par padmakumar pathiyil , Marketing Consultant , Management Consultancy

It is a pricing strategy were the price is set  at a higher level while introducing a product or service and then lowers the price later on when the competition increases.

 

 

hossam azzam
par hossam azzam , Fast food restaurant,s manager. , alexandria-egypt

Thanks for the invitation

Agreed with both answers given by

Mr.:Patel & Mr.:Vrindavan as well too

Divyesh Patel
par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Price skimming is a pricing strategy employed by some businesses that involves using different prices for the same product over time to generate profits. The key objective of a price skimming strategy is to achieve a profit quickly.

 

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Charge High when the product is new to the market and the market can absorb the supply in full.  Reduce the price in order to prevent competitors entry and improve the supply prospects....the process is continued till a new product is introduced by the company in the same way and the production level in the case of the first product is totally/partially withdrawn or full stock is cleared to reap the attraction and the benefit   in the same way with the same strategy.  Many Toy manufacturers adopt this strategy especially they want to take full advantage of the child-hood behavior with varied demands.

LABIB KOOLI
par LABIB KOOLI , Director of the Sectoral Center for Training in Hotel Technologies at Southern Hammamet , Tunisian Vocational Training Agency (ATFP)

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 revenuefrom 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.

Ahmed Mostafa
par Ahmed Mostafa , Digital Marketing Manager , Digital Gate

Thank you for the invitation Mr./ Vinod

Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time.

This is often used for the launch of a new product which faces little or no competition – usually due to some technological features. Such products are often bought by "early adopters" who are prepared to pay a higher price to have the latest or best product in the market.

 

Price Skimming strategy applies when there is a competition in the market. You brought a product in a market with a high price because it is new in whatever terms which will gather a huge customer attention but once the competitors brought substitute product in a market you lower your product's price and people who already had a previous image of a product will love to buy it at a lower price. 

Emad Mohammed said abdalla
par Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company

I fully agree with all the answers

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

A price-skimming strategy involves charging high prices for a product, particularly during the introductory phase. A small company will use a price-skimming strategy to quickly recover its production and advertising costs. However, there must be something special about the product for consumers to pay the exorbitant price. An example would be the introduction of a new technology. A small company may be the first to introduce a new type of solar panel. Because the company is the only one selling the product, customers that really want the solar panels may pay the higher price. One disadvantage of a price-skimming is that it tends to attract competition relatively quickly, according to the Small Business Administration. Enterprising individuals may see the profits the company is reaping and produce their own products, provided they have the technological know-how.

Mohammed Fathe  Shaheem
par Mohammed Fathe Shaheem , Operation Executive , Arabian Construction Company

Fully agreed by experts and learned new topic , thank you all 

georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

There are internal and external key elements in effective pricing strategies

 

Interior elements:

- The company's goal: What is the goal of the company, whether it is for-profit or non-profit or cooperative?

- The company's strategy: Does the company want to classify themselves from high-end companies that not only sell the most expensive prices (such as Royce Rise and Sony), or from economic companies targeting the best prices (Khavandaa and Acer) .. and what marketing strategy you have ..

- Product costs: how much it will cost you the product industrialized / importing and selling .. and how much of the fixed costs (that do not change with the number of sold quantities, such as salaries and rent the place) and variable costs (such as raw materials) ..

 

Foreign elements:

- Demand for the product size .. big or small?

- Competition in the market .. quiet or fierce?

- The economic situation of the country and society

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