Is Price Skimming Right for Your Business? Here’s How to Find Out

Bringing an innovative or new offering to the market is exciting. You have the opportunity to claim nearly 100% market share with little to no competition, at least for now. But your success depends on the pricing strategy you choose. Targeting less price-sensitive customers, like those willing to pay higher prices to be a product’s first users, can be an effective pricing strategy for those in your situation — one known as price skimming. But when is the right time to use this strategy, and what does it involve? Read on to learn more about how to use price skimming strategically. When sales, finance, and legal are disconnected, the customer feels the pain. Learn how Revenue Cloud can help. Price skimming is a pricing strategy that involves setting a high initial price for a new product and then gradually lowering it over time. Entering the market at a high price point can signal to customers that a product is high quality, high status, innovative, or otherwise superior to other products. And this can create demand among customers who are willing to pay more for these perceived benefits. Often, companies that use this pricing strategy face little to no competition, so…