Cream skimming

Cream skimming is a pejorative conceptual metaphor used to refer to the perceived business practice of a company providing a product or a service to only the high-value or low-cost customers of that product or service, while disregarding clients that are less profitable for the company.

The term derives from the practice of extracting cream from fresh milk at a dairy, in which a separator draws off the cream (which is lighter, and floats) from fresh or raw milk. The cream has now been "skimmed" or captured separately from the fresh milk.

The idea behind the concept of cream skimming in business is that the "cream" – high value or low-cost customers, who are more profitable to serve – would be captured by some suppliers (typically by charging less than the previous higher prices, but still making a profit), leaving the more expensive or harder to service customers without the desired product or service at all or "dumping" them on some default provider, who is left with less of the higher value customers who, in some cases, would have provided extra revenue to subsidize or reduce the cost to service the higher-cost customers, and the loss of the higher value customers might actually require the default provider to have to raise prices to cover the lost revenue, thus making things worse.

Whether or not the perceived negative effects of cream skimming actually do occur – or only occur in limited circumstances – is a matter of judgment and debate.