Pricing strategy is one of the most important element of marketing strategy and hence is considered to be a part of marketing mix,4P’s.In other words, right pricing strategy along with right product and strong sales and marketing plans is responsible for a successful business.

Skimming pricing is one of the pricing strategy in which a marketer sets relatively a higher price for its products or services and then slowly lowers the price over a period of time. Such pricing ensure that the price matches consumers willingness to pay and thus generates profits for the organization both over time and in the short term as well.

So, the main objective for this pricing is to gain maximum profit by selling its products before the market competition starts. Other objective which encourages marketers to adopt skimming pricing is:

* Companies want to ensure that they are able to recover all the cost involved in developing and marketing its new product.

* Higher costs of products helps high end consumers to associate it as exclusive and luxury product. Thus this helps to create a niche market for its higher income group. Even when the price decreases these consumers still associate with the values of these products.

The basic aim of every organization is to achieve profit.So, while setting a pricing strategy for its product or services, marketers must conduct an analysis to understand their buyers as well as their competitor’s behavior.Hence, when they adopt skimming pricing for their products, marketers ensure that their pricing matches their consumer’s willingness to pay.

Skimming pricing strategy works best when-

* There are enough buyers in the market
* There is high demand for the product
* There are no competitors(in case of new products),or there are every few or weak competitors in the market
* Applied  in growth stage of PLC.

Increasing competition is the major challenge for such pricing .Hence; marketers must test their skimming prices regularly to ensure that their pricing is valid over the period of time and holds true with the changing market conditions. If not done, then the buyers may start thinking that the company is overcharging for its product and thus this will hamper the reputation and brand identity of the organization.