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Business
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| Number of pages / Number of words: |
6 / 1564 |
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As a rule of thumb, the final price to the consumer should be at least three or four times the factory door cost. The decision about how high a skimming price should be depends on two factors: (a) the probability of competitors entering the market and (b) price elasticity at the upper end of the demand curve...
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If competitors are expected to introduce their own brands quickly, it may be safe to price rather high.
On the other hand, if competitors are years behind in product development and a low rate of return to the firm would slow the pace of research at competing firms, a low skimming price can be useful...
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