In 1986 Daniel Kahneman, Jack Knetsch and Richard Thaler published the results of telephone surveys, run in Toronto and Vancouver in 1984 and 1985, that asked people to judge short scenarios about prices, rents and wages. The answers weren’t about whether a price was high. They were about whether a change broke an unwritten deal.

The answers

PublishedKahneman, Knetsch and Thaler, “Fairness as a Constraint on Profit Seeking: Entitlements in the Market,” American Economic Review, September 1986. Samples of 101 to 157 respondents per question.

The authors explained the pattern with what they called dual entitlement: customers are entitled to the terms of the usual transaction, and firms to their usual profit Published. A rise that protects your profit from a cost you didn’t choose is fair. A rise that exploits demand, a shortage, a lack of competition or a customer who can’t easily leave is not.

Customers let you keep your margin. They don’t let you use their loyalty against them.

Five rules for a DTC price rise

1. Name the costThe lettuce question is the tariff question. Say which cost went up: “the duty on our bottles went from zero to 12.5% this summer” beats “costs have increased.”
2. Never tie a rise to demandSelling out, a viral moment or a competitor’s stockout are snow shovel reasons, whatever your real reason.
3. Take back a discount before raising a list priceEnding a $200 discount drew far fewer “unfair” answers than charging $200 over list: 42% against 71%. Shrinking a standing discount is the gentler first move; The First Offer covers how.
4. Don’t charge the tenant moreThe landlord question, the most unfair in the set, describes a subscriber. Raising existing subscribers first or most because they’re less likely to leave is the rise customers punish hardest (chapter 8).
5. Size still mattersA 2016 meta-analysis by Farid Tarrahi, Martin Eisend and Florian Dost found that an unjustified motive hurts more than a cost justification helps, and that the size of a change predicted fairness judgments more strongly than the motive Published. A good reason doesn’t license a rise twice the size of the cost.

When costs come back down

When a furniture maker’s cost fell by $20 and it kept its price, 53% of the 1986 respondents called that acceptable Published. People mind a kept saving less than an invented cost. That matters now the 2025 emergency tariffs have been struck down and refunds are moving (chapter 12). But if your announcement said “because of tariffs,” customers will remember. The fair move is a visible gesture back on the SKUs most affected.

Do this

• Write the reason in one sentence. If it names a cost, keep it. If it mentions demand, competitors or “the market,” rewrite it. If you can’t name a cost, make the rise smaller or use a tier (chapter 7).