Which pricing strategy involves a high initial price that is later lowered to attract more customers?

Market skimming pricing is a strategy where a product is initially offered at a high price to maximize revenue from early adopters who are willing to pay a premium. This approach is often used when a new product is first introduced, particularly in technology or luxury goods markets. The high initial price captures the maximum amount of profit from consumers who value the product highly. As competition increases or as the early market becomes saturated, the price is gradually lowered to attract a broader customer base. This allows the company to recover its initial investment costs and then reach a wider audience over time.

In contrast, other strategies like market penetration pricing focus on setting a lower initial price to quickly attract customers and gain market share, which is not the same approach. Variable pricing refers to adjusting prices depending on demand or other factors, rather than starting high and then lowering the price. Loss leader pricing involves reducing the price of certain products to increase consumer traffic, with the expectation that they will buy other, more profitable items, which also differs from the skimming strategy.