Pricing power

The ability to raise prices without losing enough volume to make it pointless.

The measurement is arithmetic. A company that raised prices 8% while input costs rose 5% expanded its real pricing by 2.9 points, and one whose volumes held through that increase has demonstrated something no survey could establish.

Warren Buffett's formulation, that the single most important decision in evaluating a business is pricing power, is not rhetoric. It is the observable consequence of every moat, and a business that needs a prayer session before raising prices by a tenth of a percent has told you it has none.

Track price and volume separately through a cost shock.