Price skimming

When a company makes a new product, they can choose how much to charge for it. Price skimming is when they start by charging a very high price. This is like when you get a big piece of cake at a party, the first slice is always the biggest and most expensive!

The company wants to get as much money as possible from people who really want the product and are willing to pay a lot. But eventually, they will lower the price to make it more affordable for other people who want it but couldn't pay the high price at first.

This is like when the party's over and there's only a few slices of cake left. The host might offer them at a lower price to make sure everyone can have some.

Price skimming can help the company make a lot of money at the beginning, but it might also make some people unhappy if they can't afford the product right away.