What Is Market Skimming?

Market skimming is a technique that is used in the pricing of products. It involves the manufacturer of a product setting a high price for products in order to attract a high-end market.

The main focus of market skimming is to ensure that the manufacturer gets as much revenue as possible before other companies begin producing similar products. Examples include new software and cellular telephones, which often are priced high at their introduction and gradually decline over time. As they age, these products are sold at lower cost in an attempt to ward off competitors and attract a new customer base of low-end buyers.