Price skimming initially sets a high price for a product, which can lead to a high gross margin as the initial costs are recouped. However, as the price is gradually lowered, the gross margin may decrease. In terms of units sold, initially, when the price is high, the number of units sold may be lower. But as the price decreases over time, the product becomes more accessible to a larger market, potentially increasing the number of units sold.
Need to improve your product pricing to maximize your profit margin? This Pricing Strategies Toolbox...
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