Price Skimming

Setting high prices for initial product launch to obtain high profit margins. 

These higher margins cover costs of product development and research and development. 

Prices can be lowered as product sales slow or competitors enter the market - see Product Life Cycle.

High demand products only. Usually reserved for firms that have obtained a first-mover advantage. 

Competitors (fast-followers) can take time to offer similar products / alternatives and during this period the firm should maximise its competitive advantage to maximise profitability.