Which pricing strategy involves setting prices higher than those of competitors?

The pricing strategy that involves setting prices higher than those of competitors is skimming. This approach is typically used when a company introduces a new product or innovation to the market. The idea behind skimming is to maximize profits from early adopters who are willing to pay a premium for the latest features or benefits before gradually lowering the price to attract a broader customer base.

When utilizing skimming, businesses leverage the perception of exclusivity or superior quality associated with higher prices. This strategy can help recoup research and development costs quickly and establish a strong market presence before competitors can respond with similar offerings. Companies that employ this strategy often do so in markets where they have some distinct advantage or unique selling proposition.

In contrast, penetration pricing involves setting lower prices to gain market share quickly, bundling refers to offering multiple products or services together at a single price, and cost-plus pricing is based on adding a standard markup to the cost of producing a product. These strategies do not focus on setting prices higher than competitors, which distinguishes skimming as the correct answer in this context.