Price Skimming

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Price Skimming

The practice of a company offering a new product and charging a high price at first, but gradually reducing it before competitors begin to sell similar products. For example, a company may offer a new product at $40 per unit, then in six months reduce the price to $35, to $30 in another six months, and so forth. Price skimming allows the company to recover its sunk costs (such as research and development) while still remaining competitive when other companies begin to offer substantially the same product. It is also called a high price strategy.
References in periodicals archive ?
Perhaps a starting point should be an investigation into why our largely foreign-owned energy companies can have a high price strategy here whilst holding costs down in Europe.
Due to the strong impact of AMD chips, Intel has had to adjust its Core Due 2 price -- its new 64-bit product, marking a U-turn to its past high quality and high price strategy.