As seen in Forbes, billionaire CEO of Berkshire Hathaway; Warren Buffett stated “The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without loosing business to a competitor, you’ve got a very good business”.
Investors that have spent any time delving into retail pricing know there are numerous approaches. Pricing approaches across industries, countries and companies typically fall into three categories:
- Cost-based pricing
- Competition-based pricing
- Customer value-based pricing
The ultimate goal of any company is to achieve an average until retail price, as close as possible to the initial price that they set the product for.