One characteristic of price skimming is that it charges a high initial price to recover development costs.

• A. True
• B. False
• C. Only for tech products
• D. Not applicable

Answer: (A)

Price skimming sets a high initial price to maximize profits from early adopters and recover development costs. By launching at a premium, a company can quickly recoup investments in product development, testing, and marketing while the demand from early buyers who value being first helps cover those costs. As demand evolves and competition increases, the price can be lowered to attract more price-sensitive customers, expanding the market. This explains why the statement is true: charging a high initial price to recover development costs is a characteristic of price skimming. It's not restricted to tech products; it can apply to any new, innovative offering.