A plan made by the company that establishes the initial price and any changes to pricing after that to help meet the marketing goals of a product

Its setting an initial high price for a product or a service before a competitor enters the market.

Setting an initially low price for their new product or service to attract new consumers.

Battle for market share is won by advertising, promotion, distribution or unique product features.

Market skimming, penetration pricing, and competitive pricing are the three types of pricing strategies.

The purpose of market skimming is that business can set a high price to try and reach the break even point quickly and recover its development costs.

Penetration pricing should only be used when the variable costs of the product are low and one time development costs are high.

Businesses sell the same product to match or follow the price of other competitors.

If a business deos not recover its development cost before the competitors enters the market, the business could be at major competitive disadvantage.

If the research is accurate, the increased by the low launch price will recoup the development costs and the fixed costs through sheer volume of sales.

To ensure that there store have competitive prices, some retailers hire comparative shoppers, people who are paid to shop.

A weakness of market skimming is that competitors can launch there products at lower prices than that charged by the original producers because the development cost are lower.

The initial low price of the product will make consumers buy the product instead of waiting.

To build customer traffic, retailers usually match prices on items the competition features in special clearance sales.