Why do companies launch products at much higher prices, only to reduce the price drastically after a few months? I see this to be a prevalent trend - companies too often launch products at much higher prices than they know is gonna lead to good sales numbers, only to reduce the price drastically after a few months. And by the time they do so, they lose any competitive advantage they might have had, and thus can't "recover" any more as far as product sales are concerned.

Let's take a concrete example - the Razer Phone 2. They knew people didn't know much about the brand when it was launched, as Razer is new into making phones. Thus, it only made sense to have launched it for something more reasonable, like $600 perhaps. But no, they launched it for \$800-850. And of course, it didn't sell well. And now after 2-3 months, its price is \$500. But it lost traction - all the excitement that was there when it was first launched about its gaming capabilities is not so fresh in people's minds anymore. Moreover, there are other products at competitive prices that are more value for money. Why couldn't they have launched it for \$600 in the first place?

Another example - Blackberry. They were all but practically dead after a few years of not catching on the Android train. Then they decided to adopt Android a couple years back, and launched a phone (I can't remember its name). It was a good product, but again, they priced it ridiculously high for a company coming back from dead, and making a first product with a new technology for them. Of course it didn't sell well. But had they launched for half the price, I strongly think the phone would have sold well. I know I for one would have bought that phone, but for around \$400 - not for \$750.

Is the reason greed or over-optimism? Surely that can't be right? Don't they want to sell more products, and thus get more profits?

P.S. I am not a finance student or economics student. Just a layman trying to understand why so many companies go for seemingly stupid product pricing.
Two very general reasons are:

1) High prices at the beginning target "early adopters" - people that have a higher "willingness to pay" for a new product just to have it first. Early adopters know that they pay more, and they 're ok with it.

2) As regards consumer reaction, it is much better to reduce prices than to increase prices. So sometimes prices are set high to "feel" the market response and then adjust accordingly.

Note: these are very general and "universal" reasons for the phenomenon. The degree to which are qualified in each special case, market, country, etc its a matter of examination. Also, in some circumstances other strategic considerations may lead to the opposite action: start very low to "sweep the market" (price self-subsidy) in order to drive competitors out/increase market share, and then start increasing prices when market has become "captive" to a degree.