A pricing strategy in which a newly launched product is initially set at a high price and then gradually its price is lowered over time is called price skimming. The main goal of the price skimming strategy is to maximize the profit potential of a newly launched product’s novelty factor taking into account demand, timing, and competition.
Consumer Electronics like mobile phones are well known to use Price Skimming as a pricing strategy, launching the latest and greatest phones at a steep high price and then gradually discounting the phone as a newer version is launched.
Apple typically lowers the price of the prior versions, as it did with the iPhone 13. After its release in 2021, it is now being sold at $100 less together with the release of the new iPhone 14.
For setting up prices of new products in a draft status, you can use the Konigle’s Bulk Price Editor as it will help with :
- Easily setting, increasing or reducing your prices.
- Setting up a validity period for skim pricing.
- Publish draft products by setting them as Active as you configure the prices.
Follow the steps below to start:
- Install the Bulk Price Editor.
- From your Konigle dashboard, navigate to the Bulk Price Editor.
- Start by filtering the products you’d like to set prices for. If this is the first time you’re setting up your pricing, you can click on More filters and select the appropriate filters to narrow down your search. You can even select all your draft products. Click on Apply Filters.
4. Configure your prices. Choose Set, the Selling price, with the amount that refers to the lower price after the launch. Let us take the example for the iPhone 13. Launch Price: $699 and After Launch Price: $599.
The product then needs to be set to the After Launch Price.
You can even choose to apply Charm Pricing by rounding off the price to .99, .95, etc.
5. Enter your description for this price request. (E.g. Regular Price After Launch). Next is to set your validity dates. Enter your validity dates and preferred timezone. Click Submit.
6. Leave these fields blank for the products to stay on draft status and hit Submit.
1. Go back to the Bulk Price Editor with another pricing request by filtering the products.
2. Set your prices. This time, set it to the launch prices. You can either set it to a specific amount increase the price using a percentage or a multiplier.
3. Enter your Description and validity dates. Ensure that you enter the valid to date as the end date of these launching prices. Click Submit.
4. Choose the field to publish these products. You can also opt to Add a promo disclaimer if you prefer. Click Submit.
5. Your products should now show active in your store with the launching price and it it set to end based on the validity dates you have applied.
Needing to make changes to your pricing request? Konigle’s Bulk Price Editor has a one-tap Revert button in case you need to undo the changes. Just go to History>Revert.
Price Skimming strategy involves lowering product prices in phases. After your initial price launch, you can consider using Konigle’s Markdown Plan that helps set specific pricing once your inventory hits a certain level. This would be very useful in implementing a tactic of automatically marking down product prices.
1. Click on Automatic Strategies from your Konigle dashboard>Prevent Dead stock Tool.
2. Filter your products. The tool allows you to set one or more conditions to filter products. In this example, let’s say you would like to set a markdown plan for products with more than 100 inventory. You can filter through Inventory Stock that is greater than 100.
- You can another condition by clicking Add another condition.
- You can select if you want to include all products that meet all conditions or any condition
- You can also opt to automatically include all variants if one meets any of the filters.
3. Enter the description of your Markdown plan. (E.g. Products more than 100).
4. Indicate the start date to implement the changes.
5. Add your markdown rules.
5.1 Start with choosing the percent change.
5.2 Indicate the duration of this first markdown rule.
5.3 Enter the stock level to consider in implementing this rule.
For example, if you would like to mark down the products with 100 stocks for 10% off for 3 days, you can indicate this under the 1st markdown rule.
This runs in phases. After 3 days, we can then set another markdown rule to even further decrease the price of the products that still have more than 100 stocks by 20%. You can choose another duration for this.
Here’s how it should look like:
6. Select your rounding method. This enables you to automatically incorporate Charm Pricing in your selling prices.
7. You can also select to Sell at loss and indicate any product tags.
8. Once finalized, hit Submit.
9. You can see a confirmation page to review the markdown plan. Click Confirm to submit the request.
Price Skimming is one of the proven pricing strategies used by businesses to maximize profit potential of newly launched products. Incorporating an effective pricing strategy boosts customers’ trust and helps improve your profit margin. In implementing price skimming, a business must consider things such as costs, product demand, customers, and competitors.
Konigle Tools featured to implement Price Skimming in a few minutes :
1. Bulk Price Editor
2. Dead Stock Prevention Tool