Price skimming can maximize the profit margin for a product by initially setting a high price for a new or innovative product to 'skim' off the maximum willingness to pay by customers. This strategy targets those customers who are not price sensitive and are willing to pay a premium for the novelty or unique features of the product. As the product becomes more common or competitors enter the market, the price is gradually reduced. This allows the company to maximize its profits at each stage of the product's lifecycle.
Need to improve your product pricing to maximize your profit margin? This Pricing Strategies Toolbox...
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