Skimming pricing involves setting a high price initially and then lowering it later.

Skimming pricing involves setting a high price initially and then lowering it later.

• A. Skimming pricing
• B. Predatory pricing
• C. Penetration pricing
• D. Cost-plus pricing

Answer: (A)

High initial price with planned reductions over time describes skimming pricing. The idea is to charge a premium when the product is first launched to recover development costs and appeal to customers willing to pay more, and then gradually lower the price to attract more price-sensitive buyers as the product reaches broader markets. This approach fits the statement because the price is deliberately high at the start and lowered later. The other strategies don’t describe this pattern: predatory pricing aims to push competitors out by setting prices very low; penetration pricing starts with a low price to gain market share from the outset; cost-plus pricing sets price by adding a fixed markup to the cost, regardless of demand or timing.

High initial price with planned reductions over time describes skimming pricing. The idea is to charge a premium when the product is first launched to recover development costs and appeal to customers willing to pay more, and then gradually lower the price to attract more price-sensitive buyers as the product reaches broader markets. This approach fits the statement because the price is deliberately high at the start and lowered later.

The other strategies don’t describe this pattern: predatory pricing aims to push competitors out by setting prices very low; penetration pricing starts with a low price to gain market share from the outset; cost-plus pricing sets price by adding a fixed markup to the cost, regardless of demand or timing.