price skimming

Definition

A pricing technique designed to allow a business to charge each potential customer the most that he or she would be willing pay for a given product or service. The product or service is first offered at the highest price that customers will pay, and the price is incrementally dropped until it reaches a level designed to be viable for the long term.

Use price skimming in a sentence

You need to make sure that you are never accused of any price skimming so that you do not get a bad reputation.

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He practiced price skimming and we all laughed at him a lot because we felt like he didn't need to do it at all.

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To maximize their profits, many companies participate in price skimming to elicit the highest price their customers would be willing to pay.

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