§ 01
KO — Operating Margin, Net Margin. Open KO on the Ledge to see current values.
§ 02
| Type | Price Increase Effect | Examples |
|---|---|---|
| Inelastic (pricing power) | Revenue rises (customers stay) | Insulin, iPhone, Coca-Cola, Netflix |
| Elastic (no pricing power) | Revenue falls (customers leave) | Generic commodities, airlines, fast fashion |
| Unit elastic | Revenue unchanged | Rare in practice |
§ 03
Warren Buffett looks for companies that can raise prices without losing customers. That is pricing power, and it is one of the strongest indicators of a durable competitive moat.
§ 04
Compare the **gross margins** of KO (Coca-Cola, strong brand) vs a commodity producer. High margins often signal pricing power.
§ 05
A streaming subscription service raises monthly price from $10 to $12 (20% hike). They lose 8% of subscribers within 90 days. What happens to net monthly revenue?
§ 06
Five questions · AI feedback
Sit with the ideas.
Luxury watchmaker Rolex raises prices 8% annually and sees no decline in sales. A budget airline raises fares 8% and loses 15% of passengers. Which has more inelastic demand?
Why: