Answer to Question #191367 in Economics of Enterprise for umar

Question

Price skimming is when you have a very high price that makes your product only accessible upmarket. 

Answer 1

Price skimming is estimating approach in which the producer sets a high initial cost to draw in buyers with solid desire for the product and the assets to purchase it, and then gradually decreases it. As the demand of the primary clients is satisfied and competition enters the market, the firm lowers the price to attract other customers who are more cost delicate. Since price skimming involves setting of higher prices before other competitors come into market, it makes less people able to obtain the product. Those who access it are most likely in upmarket. The high price of the product makes it only available in upmarket since people there can afford it.