Price skimming is a launch strategy that starts a product at the highest price early buyers will pay, then lowers the price in steps to reach the next group. A new phone that opens at a premium and costs less months later is a common case. The early high price recovers profit before rivals force a cut. That opening price can also invite rivals to undercut it. It is the reverse of penetration pricing.

Related Lessons:

• Click Here for our lesson on How to Price Your Products & Services
• Click Here for our lesson on What Is the Product Life Cycle?