for new and innovative products or services, innovators and early adopters are willing to pay a higher price to obtain the new product or service
product must be perceived as breaking new ground, offering new benefits unavailable in alternative products.
may use this to signal high quality, build production capabilities, earn back some high research and development investments, test consumer price sensitivity.
appeals to those segments of consumers who are willing to pay a premium price to have the innovation first
common in technology markets, video games
however, is this high price market segment becomes saturated and sales slow down, companies must lower price