A strategy of charging a high introductory price for a new product that invites eventual competition is called price skimming.
Price skimming is a pricing strategy where the seller of the good charges a high introductory price.
The high introductory price is charged to recoup the amount spent on the production of the good before competitors enter the market. With time, competitors would enter the market and the price of the good would decline to the industry average. A disadvantage of price skimming is that the firm may lose market share due to high prices.
Price skimming contrasts to predatory pricing where the initial price for the good is very low.
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