Pricing Power Index
Score your ability to raise prices without losing customers. Evaluate Brand, Lock-in, and Market Position to determine your strategic leverage.
The 5 Factors (0-10)
Strategy Recommendation
Follow the market leader.
Strategic Leverage
Competitive
Score Analysis
Your score of 55 indicates you are a Competitive.
Primary Driver
Look at the longest bar in the chart. That is your core advantage. Protect it.
Weakness
The shortest bar is where competitors will attack. Shore up this defense.
Execution Steps
Rate your Brand Strength (0-10).
Rate Product Uniqueness (0-10).
Rate Switching Costs (How hard is it for customers to leave?).
Rate Market Share and Necessity.
The calculated 'Power Score' tells you if you are a Price Maker or Price Taker.
Pro Strategy
- If your score is >70, you should likely be raising prices annually. You are leaving money on the table.
- If Switching Costs are low, focus on building 'Stickiness' (integrations, data gravity) before raising prices.
- Brand Strength is the biggest lever. Investing in brand is investing in long-term pricing power.
Core Concepts
Pricing Power
The ability to raise prices without reducing demand. Warren Buffett calls this the single most important decision in evaluating a business.
Price Maker vs Taker
Makers set the price (Apple). Takers must accept the market price (Wheat farmer).
Moat
Structural advantages (Brand, Network Effect, Switching Costs) that protect your margins from competition.
What is Pricing Power Index?
The Power Index is a weighted scorecard based on the 'Moat' framework used by investors. It quantifies intangible assets into a single metric representing elasticity resilience. High scores correlate with low elasticity.
Best For
- • Deciding on the magnitude of a price increase.
- • Evaluating a business for acquisition.
- • Identifying strategic weaknesses.
Limitations
- • Subjective inputs.
- • Doesn't account for external regulations (e.g. Utilities have high power but are regulated).
Alternative Methods
Elasticity Simulator
Quantitative measurement using sales data.
Competitor Price Index
Measuring relative price position, not power.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Enterprise Software
Flat revenue growth.
Scored 85 on Power Index due to high switching costs (ERP system).
Generic Apparel
Margins eroding.
Scored 25 on Power Index (Commodity).