Question

In this method of pricing, goods are sold at higher prices so that fewer sales are needed to break even. It also helps the company in recovering the research and development costs which are associated with the development of a new product.
This method of pricing is ______.

Options

• Penetrating pricing

• Cost-plus pricing

• Variable pricing

• Creaming pricing

Answer 1

In this method of pricing, goods are sold at higher prices so that fewer sales are needed to break even. It also helps the company in recovering the research and development costs which are associated with the development of a new product.
This method of pricing is creaming pricing.

Explanation:

Setting high prices for a new product initially, especially if it has special features or new technology, is called creaming pricing, also known as price skimming. This approach helps businesses recoup their R&D costs and identify early adopters willing to pay more before prices gradually decline.