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Price Skimming

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Price Skimming

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • May 6, 2021 at 4:53 am #619802
    Sourav9271
    • Topics: 157
    • Replies: 103
    • ☆☆☆

    Hello sir,
    Can you pls explain why is price skimming strategy conducive when the level of demand in unknown?

    May 6, 2021 at 7:43 am #619824
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49600
    • ☆☆☆☆☆

    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.

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