In this article, we will discuss about Skimming and Penetration Pricing and their differences.
There are many methods or strategies of pricing & among these methods, skim pricing or skimming & penetration pricing are considered to be most important.
Definition of Skimming
When the prices are kept high so that the rich class of the society can be attracted, the method is called skim pricing or skimming.
Defintion of Penetration pricing
On the other hand, penetration pricing is a method of selling at low prices in order to attract maximum customers.
Difference between Skimming and Penetration Pricing
The points of difference between skim & penetration pricing are explained below-
| Basis | Skim Pricing | Penetration Pricing |
|---|---|---|
| 1. Nature of Price | Prices are set very high. | Prices are set attractively low. |
| 2. Objective | This pricing is set in order to attract the rich or elite class of the society. | This pricing is done in order to attract maximum number of customers. |
| 3. Benefit | Skim pricing helps to build up rich brand image. | Penetration pricing helps to capture larger market share. |
| 4. Product demand | In this case the demand is low. | In this case the demand is high. |
| 5. Cost Recovery | If skim pricing is followed, then greater time is required to recover to cost. | If penetration pricing is followed, then less time is required to recover the cost. |
| 6. Nature of users | Skim pricing is beneficial when the product concerned is suitable for use by the rich section of the society. | Penetration pricing is beneficial in case of products which are suitable for use by most of the customers. |
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