Warren Buffett Says the 'Single Most Important' Trait in a Business Is Pricing Power—If You Need A 'Prayer' To Raise Prices, It's A Terrible Business

Warren Buffett doesn't care how charming your CEO is or how slick your business model looks. If you can't raise prices without breaking a sweat, he's not buying.

In a 2010 interview with the Financial Crisis Inquiry Commission, released by the National Archives and covered by Bloomberg in 2011, Buffett broke it down:

"The single most important decision in evaluating a business is pricing power," he said. "If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10%, then you've got a terrible business."

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He wasn't talking about prayer figuratively. Buffett meant it—if a business can't raise prices confidently, it's not durable, no matter how shiny it looks on paper.

That said, most people would assume great businesses are led by great managers. Buffett doesn't. In the same conversation, he quipped, "An extraordinary business does not require good management."

That's classic Buffett: sharp, unfiltered, and focused on fundamentals. One of the more telling examples of that mindset is his investment in Kraft. Despite calling two major moves by then-CEO Irene Rosenfeld "dumb," Buffett still stuck with the company. He even described Rosenfeld as "perfectly capable," which, coming from Buffett, is about as lukewarm as praise gets. Still, Berkshire Hathaway's stake in Kraft—worth around $3.3 billion at the time—wasn't going anywhere.

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This isn't a new playbook for Buffett. He's been riding the pricing power wave for decades.

See's Candies is the textbook example. Berkshire bought it in 1972 for $25 million. It wasn't a tech company or a market disruptor—it was just a chocolate company with insanely loyal customers. That loyalty gave See's the freedom to inch up prices year after year without losing business. The result? Over $1.35 billion in cumulative pre-tax earnings by 2019.

Then there's Apple. For a guy who avoided tech like the plague, Buffett's $40 billion bet on Apple raised eyebrows. But he saw what others missed: Apple's not just a tech company—it's a pricing machine. With its fiercely loyal fanbase, Apple can drop a new iPhone and charge $1,200 without batting an eye. That investment ballooned to over $150 billion, proving Buffett's pricing power thesis once again. Although he's dumped nearly 70% of his shares, he still owns a significant stake.

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And let's not forget Coca-Cola. Berkshire has held onto Coke stock for decades, not because it's trendy, but because it's practically inflation-proof. Coke can quietly bump up prices and no one flinches. People don't switch to off-brand soda when prices go up a dime—they just pay it.

Buffett's pricing power obsession isn't just about theory—it's how he builds one of the most successful portfolios on Earth. If customers stick around even after a price hike, that's not just a good business—that's a Buffett business.

For investors trying to think like the Oracle of Omaha, the lesson is simple: stop hunting for flashy growth and start looking for companies that can charge more and still keep the crowd.

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