Price Skimming

The level of demand is likely to be unknown because it is likely to depend on the selling price chosen, whatever pricing policy is adopted and is not directly related just to a price skimming policy. Price skimming is a policy worth considering when it is a new product on the market and therefore some customers will be prepared to pay a high price so as to be the first to have the new product. It involves charging a high price initially and then gradually reducing the price so as to be able to get more and more customers, all of who are being charged as much as they can afford. I explain this, with examples, in my free lectures on pricing.