Skimming politics

Also called: skimming strategy or skimming

In skimming politics, the price of a new product is deliberately set high at launch. As a result, first only consumers who are willing and able to pay a high price will proceed to purchase. In other words, the part of the market that has more to spend and the so-called early adopters. By lowering the price over time, the product comes within reach of an increasingly larger part of the target group.

Using a skimming policy can increase the overall profit from the sales of a product compared to a policy with a lower introductory price that remains the same thereafter. Also, with skimming policies, a product's development and other upfront costs are recovered more quickly.

It is also referred to as skimming strategy or skimming. A skimming strategy is the opposite of a penetration strategy. With the help of low prices, an attempt is made to acquire as large a market share as possible in as short a time as possible.

Prerequisites for a successful skimming strategy

Essential to a skimming strategy is that when a new product is introduced, consumers value it so much that they are willing to pay a high price for it. This strategy works particularly well for consumer products that are regularly introduced updated versions with distinctive features. Think of smartphones, televisions, cars and movies. Another condition for a successful skimming policy is that competitors fail to offer an equivalent proposition at a lower price within the foreseeable future.

Whereas the strategy at the beginning is to charge relatively high prices to maximize profits, after reaching a "normal" level, the price may be further reduced to generate maximum volume and, toward the end of a product's sale, to clear out inventories. In the case of books, selling copies that have been "left over" after a period of time at a low price is referred to as ramshackle.