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GCSE Business · key term
Setting a high initial price for a new product, then lowering it over time.
Used by AQA, Edexcel and OCR
Paper 2
Revise: Pricing StrategiesPrice skimming means charging a high price when a new product is introduced, then lowering it over time. The initial customers are those willing to pay more to obtain the product early. Later reductions make it affordable to a wider group.
Specification 2.2.2 · Paper 2
Price skimming takes the opposite approach: a new product launches at a high price, which is lowered over time. Early adopters—customers keen to own the latest product—may pay more to obtain it sooner. New iPhone models and football boots illustrate the appeal of newness to these customers.
Distinguish penetration pricing from price skimming: both concern a new product, but penetration starts low while skimming starts high.
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Paper 1
Setting a high initial price for a new product, then gradually lowering it.
Revise: Pricing MethodsPrice skimming means charging a high price when a new product is introduced, then gradually lowering it. The business initially targets customers willing to pay more to obtain the new product. Later price reductions can attract customers who were unwilling to buy at the launch price, helping sales to continue.