Anchor pricing is a psychological pricing technique. Businesses set a high original price for a product as a reference point to anchor customer expectations. When the price drops, the product appears more enticing to customers. For example, a retailer launches a new smartphone with an initial price of $1,000. During a promotional sale, the price is slashed to $800. Customers will perceive the discounted price as a significant saving. On the other hand, price skimming involves introducing a new product at a high initial price. This strategy takes advantage of early adopters’ willingness to pay a premium for exclusive access. Over time, the price is lowered to attract price-sensitive customers as the product's novelty wears off or competition intensifies.