Question

Give one difference between skimming pricing and penetrating pricing.

Answer 1

Sr. No.	Basis of Distinction	Skimming Pricing	Penetrating Pricing
1.	Initial Launch Price	Set at an exceptionally high level at launch.	Set at an aggressively low level at launch.
2.	Primary Objective	To skim the cream of the market and maximize short-term profits.	To capture a large market share and build a deep customer base quickly.
3.	Target Audience	Premium buyers and early adopters who value novelty over price.	Mass market and highly price-sensitive consumers.
4.	Market Nature	Suitable for unique, innovative products with little immediate competition.	Suitable for highly competitive markets with many close substitutes.
5.	Subsequent Pricing Trend	Prices are gradually lowered as competition enters.	Prices are gradually raised once market dominance is secure.