#Price skimming and penetration examples full

That’s because it typically succeeds when a few conditions are met.įor starters, price skimming is effective when there’s a lack of competition for that brand or product.

#Price skimming and penetration examples full

Price skimming is full of pros and cons, like with any pricing strategy. Price skimming is when a brand or retailer charges a high price for a product at launch and then reduces that price over a short period of time. Usually, they’re willing to pay it too, because of Apple’s reputation and cutting-edge products. There’s a cost for being an early Apple adopter, and shoppers know it. In a few months, that price drops, opening the door for other types of buyers. Historically, new Apple products-like the iPod, iPhone, and iPad-launch with a premium price attached. The skimming refers to the different customer segments the various prices can attract: the initial high price for early adopters and brand evangelists, the lower price(s) for more cost-sensitive buyers.Īgain, Apple is a strong example of a price-skimming brand.

To do so, you need to know about price skimming-and whether it’s a pricing strategy you want to use for your next big thing. Obviously, you want to get a new product launch right.

Get it wrong, and it can be a public relations nightmare and flat sales. Get the price right, and you can drive sales, hype, and long-time customers. Apple is usually on the winning side of its product launches, with lines wrapped around the corner for the next iPhone or new gadget.Ī big part of a successful product launch is the price. When done right, a new product launch can be a big win for a brand.