Warren Buffett: Agony

“We like buying businesses where we feel that there’s some untapped pricing power…. One of the questions we asked ourselves [when we bought See’s], and we thought the answer was obvious, was: if we raised the price 10 cents a pound, would sales fall off a cliff? And of course, the answer, in our view at least, was that no, there was some untapped pricing power in the product. And it’s not a great business when you have to have a prayer session before you raise your prices a penny. You are in a tough business then. And I would say you can almost measure the strength of a business over time by the agony they go through in determining whether a price increase can be sustained.” –Warren Buffett.

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