Notes

Price skimming is a pricing strategy where a company starts with a relatively high price for its products or services, and gradually reduces the price until they reach a price point that is both competitively priced and profitable. Microsoft has used price skimming as a pricing decision in many of their product and service offerings, including for their cloud computing service Azure.


The benefits of price skimming for Microsoft are numerous. Starting with a relatively high price can help to generate significant revenue quickly, and then gradually reducing the price allows for greater accessibility to a larger number of customers. This can lead to a larger overall customer base, which can be particularly beneficial for a cloud computing service like Azure. Additionally, the gradual reduction in price can also help to encourage greater usage of Azure, as customers may feel more inclined to make use of the service when it becomes more affordable. This can lead to increased repeat business and a greater level of customer satisfaction, helping to drive long-term success.