How does the price increase tester work?
Borrowed from Psychophysics: Weber-Fechner just-noticeable difference
The Weber-Fechner law says the smallest change a person can perceive is a fixed fraction of the starting level. Pricing studies often place the fraction between 5 and 10 percent, varying by category.
Elasticity sets how volume responds. A value of -1.2 means a 10% rise cuts volume by about 11%.
Worked example
A US product sells at $50 with a 60% margin. A price rise of 8% ($4) passes a 7% noticeability threshold ($3.50). With elasticity of -1.2, revenue falls 1.5% but profit rises 3.3%, and break-even volume loss is 11.8%.
How should I read my result?
Most buyers will not notice. Test on new customers first.
Expect pushback. Explain value and consider a phased rise.
Demand is sensitive. A rise probably cuts profit.
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Questions about price increase tester
How do I estimate elasticity?
Run a price test on a segment, or compare sales across past price changes.
What is a good threshold?
Start with 5 to 10 percent and test for your category.
Should I raise prices in small steps?
Several small rises can stay under the threshold, but buyers notice the total over time.