Premium launch pricing.

Price skimming launches products at high prices to capture early adopters willing to pay premium, then lowers prices over time to reach price-sensitive segments. Examples: new iPhones start at 999, drop to 799 after 18 months. New car models, luxury goods, premium consumer electronics typically use skimming.

100 market price × 50% premium = 150 skim price. 10,000 early adopters × 150 = 1.5M revenue. At 60 cost per unit: 90 profit per unit × 10k = 900k early profit. After 3 periods (typically 6-12 months each), reduce price to market level for mass market. Different segment at each price point.

Skimming vs penetration: opposites. Skimming: high price, slow market penetration, high margin. Penetration: low price, fast penetration, low margin. Skimming works when: strong differentiation, no close substitutes, patent protection, status value. Fails when: commodity market, multiple substitutes, competitive launch threats, price-sensitive target customer.

Quick example

With initial premium of 50% and market price of 100 (plus early adopter units of 10,000 and periods before reduction of 3), the result is 150.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Initial Premium %, Market Price, Early Adopter Units, Periods Before Reduction, and Cost per Unit. Frequency and unit price pull the total in different directions. The biggest surprise for most people is how small recurring amounts compound into large annual figures — that's where this calculation earns its keep.

What's happening under the hood

Skim price = market price × (1 + premium %). Early revenue = skim price × early units. Profit = (skim price - cost) × units. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Using this as a check-in

Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.