6th June 2012

Will you discount now or later?

Back in my MBA days I remember being taught about price skimming. The idea was simple. When you launched a new product or service, you launched it at a premium price, let the early adopters pay that premium so you could recover your development costs fast, and then over time, as sales dropped, you dropped the price to the market rate. On the face of it, it's a really appealing strategy for experts launching innovative services: sell high, get a cash injection, and then let nature (and market forces) do their worst. There's only one problem. And it's probably one you can see instantly...
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