Question

Which pricing strategy sets a high initial price for a new product?

• A. Penetration pricing
• B. Skimming pricing
• C. Cost-plus pricing
• D. Psychological pricing

Hint:

Skim = High initial price. Penetrate = Low initial price.

Answer 1

The Correct Option is B

Price skimming means launching with a high price to capture high-income segments first and recover R \& D costs quickly. As demand falls, prices are lowered to attract more price-sensitive customers. It’s opposite to penetration pricing, which starts low to capture market share.

Answer 2

Contrast with its Opposite: Skimming and penetration pricing are opposites, so knowing one tells you the other.

Penetration pricing starts LOW to grab market share fast. Skimming does the reverse — starts HIGH to capture high-income early adopters and recover R&D costs, then lowers price over time.

Cost-plus pricing (cost + margin) and psychological pricing (e.g. Rs.99 instead of Rs.100) are unrelated strategies that don't describe a high launch price.