Analyzing the Price Skimming Strategy for New Product Pricing

Abstract

This article presents a new model for pricing a new product considering skimming pricing strategy in the presence of competition. We consider two periods for price setting including skimming and economy period. The problem is deciding on skimming price as well as economy price in order to maximize the total profit. The derived model is a non-linear programming model and we analyzed the structure and properties of optimal solution to develop a solution method. Analytical results as well as managerial insights are presented by mathematical and numerical analysis.