Penetration Pricing Strategy vs. Skimming Pricing Strategy

Small Business Start-Up
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SMALL BUSINESS START-UP
Penetration pricing strategy is a strategy where the demand of goods and services is relatively elastic. On the other hand skimming pricing strategy is a type of strategy where the demand of goods and services is inelastic. On the case of penetration pricing strategy the profit margin is very low while in the skimming pricing strategy there is a high profit margin. When it comes to the skimming pricing strategy the producer sets higher prices for goods and services especially for the new products. This pricing strategy is applicable for huge end goods like perfumes and mobile phones among others (Kurtz, & Boone, 2014). The main goal of this strategy is reaping the maximum revenue firm the market before that kind of good is made available to other markets. When the competitors enter the marker and t...