Price skimming

Price skimming is a strategy where a company sets a high initial price for a new product to maximize early profits from customers willing to pay a premium. Over time, the price is gradually lowered to attract more price-sensitive customers and increase sales volume. This approach is often used for innovative or unique products with little competition, allowing companies to recover development costs quickly before reducing the price to expand market reach. It balances maximizing revenue early on with later broadening the customer base as the product becomes more established.