Question

What is the pricing strategy that involves pricing a new product high to increase profits?

1) Skimming pricing
2) Penetration pricing
3) Leader pricing
4) Bundling
5) Prestige pricing
6) Competitive pricing

Answer 1

Skimming pricing is a strategy where a company sets a high price for a new product during its initial launch to maximize profits from early adopters who are willing to pay a premium price.

Step-by-step explanation:

The pricing strategy that involves pricing a new product high to increase profits is skimming pricing. Skimming pricing is a strategy where a company sets a high price for a new product during its initial launch to maximize profits from early adopters who are willing to pay a premium price. As demand from these customers start to decline, the company gradually lowers the price to attract more price-sensitive customers. This strategy allows the company to capture high profits initially and then expand its customer base.