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This question is about careers.
What is skimming in business?
Skimming in business is a method for pricing where a producer sets a high intro price to attract potential buyers with a strong want for the product and also have the necessary resources to purchase it, and then periodically reduces that price to attract new buyers in the market.
Skimming (also referred to as price skimming) consists of a company setting a price way above market value but still in a range certain customers will pay and then gradually reducing that price to open itself up to other layers of the market.
Skimming is most commonly used for these reasons:
Take advantage of consumer demand for a specific product
Capitalize on having little-to-no competitors concerning a specific product or market
To generate as much revenue as possible while demand is high
Generate more revenue by lowering the price of a product, thus making it available to a different consumer class
Companies commonly skim by setting prices for products that vastly exceed the market rate and then, over time, lowering the price until it meets the market rate for that product.
Once the demand of the first tier of customers is satisfied, the company will lower the price to attract more customers, usually ones that are a more price-sensitive contingent of the consumer population.
The primary objective of skimming in business is to generate the most revenue possible while customer demand is peaking and little-to-no competition exists in the marketplace.
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