Pricing Your Product:
Price skimming is the process where a company introduces a product line into the market at a high price and lets those willing to overpay do so before lowering the cost to appeal to the mass consumer base. Most commonly you will see this strategy with technology. A good example of this is laptops, a new model comes out each year at minimum and the older models move down a price level, leaving those who have waited with a better deal.
My question for the strategy of price skimming is this: will this strategy be effective for a new or start up company? I suppose that if a new company had a high in demand technology then it is possible they could use this as a way to enter the market. To implement this tactic would be the opposite of penetration pricing and would require the proper advertising in order to spread the word about the new product. The benefits of a new company using this and bringing something new to the table is that it may take competitors some time to catch up technologically, giving the newbies time to grab ahold of the market.
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