The Weber-Fechner Price Threshold
Customers only notice price changes above a certain percentage—use this 'just noticeable difference' to optimize increases without triggering resistance.
Explanation
Based on psychophysics, customers have discrimination thresholds for price changes. Generally, price increases under 5-7% often go unnoticed, while the threshold varies by product category and price level. This means you can implement multiple small increases more effectively than one large increase, and customers are less sensitive to percentage changes on higher-priced items.
Real-World Example
Netflix raised prices from $7.99 to $8.99 (12.5% jump) causing subscriber backlash. But raising from $7.99 to $8.49 to $8.99 over 18 months would likely avoid detection. Amazon Prime increased from $79 to $99 to $119—each 25% jump felt acceptable because previous price became new reference point.
How to Apply
Test your category's discrimination threshold through small A/B tests. Implement price increases in 3-5% increments over time rather than large jumps. Higher-priced tiers can absorb larger percentage increases. Time increases when customer satisfaction is highest to minimize sensitivity.