Apple offers its iPhone range in a variety of price ranges with each differing only by the presence of few additional features added to the higher-priced models. In consumer electronics, there is a confounding factor that there is typically high price deflation due to continual reductions in manufacturing cost and improvements in product quality - for example, a printer priced at $200 today would have sold for a far higher price a decade ago. Two years later, the company reduced the price to $549 and the new iPhone 6 took over the $649 price … Price skimming—setting a high price and lowering it as the market evolves; ... For entrepreneurs offering products that stand out in the market—for example artisanal goods, high-tech products or unique services—value-based pricing will help better convey the value they offer. A price skimming strategy focuses on maximizing profits by charging a high price for early adopters of a new product, then gradually lowering the price to attract thriftier consumers. Skimming is a pricing strategy adopted by firms under which goods are sold at high prices to capture their market value. Price-skimming (or market-skimming) calls for setting a high price for a new product to skim maximum revenues layer by layer from those segments willing to pay the high price. Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay. Examples of Price Skimming & Penetration Pricing Example of Price skimming : The implications of an imperfect market's downward sloping demand curve are evident in a typical new product pricing decision: should a product be launched with an aggressively low price from the start Price skimming occurs for example in the luxury car and consumer electronics markets. Business example of price skimming Tech businesses are known to adopt price skimming as they can use their proprietary technology to their competitive advantage. This is so that fewer sales are needed to break even. Apple, a smartphone manufacturer is a good example of price lining implementation. Penetration Pricing. Fans of a particular brand or early adopters of new technology may be willing to pay a high price to be first. Along with using a skimming strategy they also adopt a penetration pricing strategy for some of their products like for LIFEBUOY SHAMPOO AND SOAP. The method has its advantages and disadvantages. There’s a cost for being an early Apple adopter, and shoppers know it. In price skimming strategy the company sets higher price for product when product is newly launched and then gradually decrease the price whereas under penetration pricing strategy the company sets lower price initially and then gradually increase the price of product. 1. Smartphones. Penetration Pricing Examples. When Apple introduced the iPhone 5, for example, it sold for $649 for a 16GB version. Historically, new Apple products—like the iPod, iPhone, and iPad—launch with a premium price attached. Example: Conventionally, Some Shoe Company fix the price of shoes and chappals by the method of odd pricing, e.g., Rs.399.95 Ps. This is mostly implemented when the company has to undergo basic requirements of life. The purpose of such strategy is to mint higher profits within the short run period in order to recover the costs incurred in product researching ,manufacturing, marketing etc as such costs associated with the product are high. Skimming Pricing means a pricing strategy wherein the firm set high price for the product at its introduction stage so as to receive maximum profit. Penetration Pricing. The fast-moving consumer technology market provides some good examples of price skimming. For example, a cell phone company might launch a new product with an initial high price, capitalizing on some people’s willingness to pay a premium for cutting-edge technology. 2. Price Skimming Examples. A skimming strategy works well for innovative or luxury products where early adopters have low price sensitivity and are willing to pay higher prices. One industry that’s synonymous with price skimming is the smart phone market and Apple is a great example of a business that has successfully capitalised on price skimming. However, if a customer buys the same phone a year or even just a few months later, they could get it at a much lower price. While this approach can lead to a price … Price Skimming Price skimming occurs when a company sets an artificially high price for a product or service, but knows that competitors will soon enter the product or service arena. 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