Essentially, a firm has invested in the development of a new product and by charging a higher price, it can make the money back faster.Īnother reason why skimming can be a good launch strategy has to do with your brand’s equity. The reasons why newly launched products are initially very expensive may have to do with different reasons.įirst and foremost, at the moment of product launch, a company may need to recoup a lot of its investments connected to research and development. Skimming pricing refers to the strategy that brands adopt when launching products above the market price. With no further ado, let’s get into it! Skimming Pricing In this post, we’ll be looking at three fundamental strategies: skimming pricing, market pricing, and penetration pricing. Having said this it’s really important to identify the overall strategies you may want to adopt to achieve your goals. In this sense, it’s a good idea to remember that pricing can always be adjusted to reflect the response you’ll be collecting from your market. The first thing to consider, when making a pricing decision is that pricing is the only variable of the marketing mix that you can change almost in real-time.īy looking at the adoption curve of your product and at the response you are getting from your target audience you can use pricing dynamically to ignite a sense of scarcity or to sell all remaining inventory on a flash sale. Having said this, there is no need to worry. If you don’t get the pricing right, you may eat up your margins and be unprofitable even in the case of a successful launch. The price is not just one part of your marketing mix (together with product, place, and promotion) but is the only component of your marketing mix which takes into account the return you are planning on making for your marketing campaign or product launch. When launching a product on the market, one of the most important decisions to make relates to deciding its price.
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