What is Price Skimming in Retail? Explained

Price skimming is a pricing strategy in the retail industry where a company initially sets a high price for a new product or service and then gradually lowers it over time. This approach is often employed when introducing innovative or unique products to the market. The high initial price targets early adopters and customers willing to pay a premium for exclusivity or cutting-edge features. As market demand evolves and competition increases, the company progressively reduces the price to attract a broader customer base. Price skimming allows businesses to maximize revenue from early adopters before adjusting prices to appeal to a wider market audience.