Pricing Power

The ability to charge prices above what competitors can profitably match — and the choice of whether to exercise it.

Jeff Bezos held a contrarian view: high margins attract rivals and justify their R&D investments; low margins attract customers and are more defensible. He invoked “Steve Jobs’s mistake” — pricing the iPhone so profitably that the smartphone market became a magnet for competition. The implication: deliberately declining to use pricing power is itself a competitive strategy. The Everything Store also records the Walmart version of the same idea: “Our marketing strategy is our pricing strategy, which is everyday low pricing” — pricing as a brand signal, not just a P&L input.

Where this appears

• The Everything Store — Bezos’s view that high margins invite competition; the strategic case for low-margin pricing as a defensible moat.