Skim pricing

Imagine you’re Apple unveiling the latest iPhone. Skim pricing is when you slap on a sky-high price tag to vacuum cash from those who just "must-have" the latest shiny gadget before the rest of us mere mortals can afford it. It's strategy gold for skimming the cream off the early-adopter crowd before the price drops and everyone else can join the party.

Skim pricing, also known as price skimming, is a strategic approach to pricing where a company sets a high initial price for a new or innovative product to capitalize on consumers who are willing to pay a premium for early access or perceived exclusivity. This approach aims to maximize profits in the early stages of a product's life cycle before competitors enter the market. As demand from the high-end consumer segment is satisfied, the company gradually lowers the price to attract more price-sensitive segments. This strategy can enhance the perceived value of a product and recover research and development costs swiftly. However, it requires a robust brand image and a loyal customer base to be effective.