Salesforce

Salesforce enjoys a high-margin business model, with gross margins 77%) and expanding operating margin (non-GAAP 33% in FY25)). Its software is mission-critical to customers, often embedded in core processes, which gives it solid pricing power.

Management is actively improving efficiency (guidance ~34% non-GAAP margin next year), indicating that as revenue grows, profits can grow faster. Unlike commodity businesses, Salesforce does not have razor-thin margins.

While it faces competition that limits price gouging, the continued introduction of AI-based premium features (like Agentforce) could allow gradual price increases. We judge its pricing power as good but not unlimited, reflecting its ability to maintain or modestly raise prices without losing customers.