Explain skimming pricing, Managerial Accounting

Explain Skimming pricing

It is one of the most commonly discussed pricing method is the skimming pricing. This pricing method to the firm's desires to skim the market by selling at a premium price.

This pricing method delivers results in the following situations

When target market associates quality of the product with its price, and high price is perceived to mean high quality of the product.

When the customer is aerie and is willing to buy the product at a higher price just to be an opinion leader.

When the product is perceived as enhancing the customer's status in society.

When competition is non-existent or the threat from potential competition exists in the industry because of low entry and exist barriers.

When the profit represents significant technology breakthroughs and is perceived as a high technology product.

In adopting the skimming pricing the firm's objective is to achieve an early breakeven point and to maximize profits in a shorter tier span or seek profits from a niche.

 

Posted Date: 7/9/2013 1:07:40 AM | Location : United States







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