Price Skimming by Nike

Price Skimming by Nike
Jing Liu

Jing Liu

May 7 2023

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Nike has achieved success with their pricing strategy of price skimming. They set higher prices for newly released products, then slowly lower the prices over time. This allows them to make a profit, even when demand has slowed.

Nike has achieved its level of success through the use of various pricing strategies, one of which is price skimming. Whenever Nike produces a new product, they attempt to generate revenue from customers who are willing to pay a higher price. After the product has been on the market for a while, Nike then lowers its price. Typically, Nike shoes are sold at peak prices for a period of 3 to 6 months, after which prices are gradually reduced during an activity called closeout.

Nike Air Force 1 variants
Nike Air Force 1 variants

An example of this pricing strategy can be seen with the release of the Nike Air Force 1 shoes. When these shoes are first released, they are selling at $130. However, after the initial demand for the shoes decreased, Nike lowers the price to $110. This strategy allows Nike to still make a profit on its products, even when the demand has decreased.

Who said only big brands can do it? You can too!

  1. Install Konigle on your Shopify store.
  2. Go to the Bulk Price Editor tool to set the selling price of the product to the “After Launch Price” and the validity period to begin after launch period. Do not select 'Publish product’ to leave them in draft.
  3. Then make another pricing request and set selling price to “Before Launch Price” and ensure that valid to date is set as the end date of the launch period. Select 'Publish product’ so that the products will be active on your store.
  4. After the launch period, you can also schedule a markdown. Under Prevent deadstock strategy, implement the ‘Price Skimming’ tactic.
  5. Filter for products to be in the markdown and configure prices. Input a description and start date before clicking submit.

A detailed walkthrough about price skimming can be found here.

Jing Liu

Author

Jing Liu

Jing Liu has experience in procurement and inventory optimisation and researches and writes about ways to prevent dead stock and improve profitablity.