Monday, September 3, 2012

Pricing Power

From the book The Investment Checklist by Michael Shearn.

“Businesses that have pricing power typically have several characteristics in common such as high customer- retention rates; their customers spend a small percentage of their budget on the business’s product or service; the customers generate high margins and lots of cash flow; or the quality of the product is more important to the customer than the price.”
"Price increases add value to the business when they add to operating income, rather than just offsetting new expenses."