DECA+ Business Management and Administration Practice Exam 2025 – All-in-One Guide to Guaranteed Success!

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Which pricing strategy involves setting prices higher than competitors?

Skimming

The skimming pricing strategy involves setting prices higher than competitors, particularly when a product is newly launched or unique. This strategy is used to maximize profits from segments of the market that are willing to pay a premium for a new product, often due to its innovative features or perceived exclusivity. By initially setting prices high, a company can capture high margins from early adopters before gradually lowering the prices to attract more price-sensitive customers.

In this context, skimming serves multiple purposes: it helps recover development costs associated with new products quickly, positions the product as a luxury or high-value offering, and creates a perception of higher quality compared to lower-priced alternatives. This strategic pricing can also generate a favorable return on investment during the early phase of a product's lifecycle.

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Bundling

Transfer Payments

Flighting Strategy

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