What's the Best Way to Announce a Price Increase?

If you are a business owner or manager, there are probably few tasks you enjoy less than letting your clients know about a price increase. And yet, it is necessary to regularly monitor your costs and your bottom line, and that may mean new pricing is on the horizon.

‍

What’s the best way to break the news to your customers? What should you say? You know if you handle this poorly, you may lose customers. You need to maintain customer loyalty and manage your message in a positive manner. How do you let them know, as gently as possible, that a price change is coming their way? 

‍

Let’s take a look at some best practices, and then we’ll give you a sample template that can help you craft your own price increase announcement.

How to Word a Price Increase Letter or Email 

Whether you plan to tell your customers in person or with written communications, it’s best to plan your talking points ahead of time. 

‍

By doing so, you have the opportunity to turn what could be a negative experience into something that proactively highlights what your company does for its clients. Here are a few strategies you can use to turn your price increase message into a positive customer experience.

1. Be Direct

When telling your clients about the new higher prices, don’t sugarcoat the news. Don’t speak about a “price adjustment”—they know you’re increasing your rate, so it’s okay to call it what it is: an increase to the current price. 

‍

And they understand that sometimes raising prices is necessary for businesses to stay competitive. 

‍

So if you make it clear in your communications that you’re increasing prices, but for good reasons, you stand every chance of retaining their trust in you. If you try to hide the message, however, you may lose their trust, resulting in a lower level of customer satisfaction.

2. Give Them a “Why”

Are you raising rates to keep up with raw material costs? To cover the costs of new processes or additional staff? Whatever the reason, it's important to convey that to your clients. Why? Because transparency is increasingly important. People want to know that their money is being used wisely, whether it's to hire new staff or help you remain competitive. 

Possible Reasons You’re Raising Your Prices

Need some ideas? Here are some reasons you may be raising your prices (which you can convey to your clients):

‍

• An increase in your business costs: Material and transportation costs have increased greatly over the past few years, in some cases exacerbated by the pandemic. Your clients will have seen these increases everywhere from their grocery stores to the cost of internet services and will probably not be surprised if you tell them this is why your own rates are rising.
• You have been undercharging: If your own costs have not kept pace with those of other businesses in your industry, you may want a reasonable hike in prices. Here, you’ll want to remind your clients that your rates, even with the increase, are comparable to what your competitors are charging.
• You’re expanding services or products: If you’re expanding what you offer your clients, a price increase is logical. Explain to your clients what their new rate will get them, whether that’s an augmented customer service staff or widgets in a broader range of sizes.
• You’re hoping to improve your profitability: This can be a little harder to justify, but it can help to remind clients of the reasons why they do business with you rather than your competitors, and to assure them that you will continue to excel in the services/products you offer in the future.
• Your value to your clients has increased: Perhaps you recently received an advanced degree or certificate that expands your skill set. Or maybe you’ve invested in new technology that decreases the amount of time it takes to respond to client requests. It’s worth noting this in your price increase announcement since it directly impacts your ability to serve your clients. 

3. Answer What’s In It for Them

Remember that your clients chose you for a reason, and it’s okay to remind them of that reason. Yes, your operating costs are going up and you need to pass that at least partly onto your clients, but you also know you offer a high-quality service or product that is worth the increasing costs.

‍

Let them know that’s not changing. You will still provide them with superior service at a reasonable rate, and all the reasons they chose you will still be valid. You can never affirm your value to your client too many times. They need to know that you stand by your company name and will continue to excel at what you do best.

4. Don’t Apologize

One thing you don’t want to do is apologize. People know that businesses need to raise their rates sometimes, and it’s nothing you should be ashamed of or feel guilty about. Instead, voice your gratitude for their continued business and ensure them that their loyalty means a great deal to you.

5. Can You Sweeten the Pot?

Is there anything you can offer your clients in return for their acceptance of your increased pricing model? Are there new features you can adopt that will take away some of the sting of the increase? 

‍

Depending on your industry, perhaps the higher cost is letting you purchase higher-quality raw materials for your widgets, or maybe now is the time to roll out a pricing strategy that features a monthly installment plan rather than upfront pricing.

‍

If you’re the manager of an insurance agency, for example, can you balance the news of new rates with an increased range of coverage options or new discounts or programs that can potentially save policyholders money? 

‍

If you can change the message from “Here’s some bad news” to “Here’s what we’ll be able to do for you with this small increase,” you are likely to see a better retention rate following your messaging.

Price Increase Letter Template

So how do you pull all this together? Here's one option for a price increase letter template that adds a personal touch. Just customize it for your own business and industry.

Steps for Announcing a Price Increase

You’ve done the hard work and figured out how to phrase a price increase. But what do you actually do to get the word out there in a positive way? Here are some strategic steps you can take to make the news go down easily:

1. Tell Your Team First

Once you know an increase is inevitable, make sure your employees are the first ones to hear about it, well before you send any messages to your customers. 

‍

Brainstorm with them the possible objections or complaints they may have to field, and make sure you’re all on the same page about how to handle them. Make sure they are thoroughly familiar with the new pricing structure and understand why it's necessary.

‍

Your team—especially your customer service employees—will be on the front lines in handling how this price hike will be received by your clients, so ensuring their support is your first goal.

2. Personalize Your Announcement

You build customer loyalty by treating each client as the individual they are. So give your clients a personalized notice, such as a letter or email, or an in-person visit.

‍

That way, too, you can answer concerns or questions quickly and efficiently, keeping your loyal customers happy in the knowledge that they matter to you.

‍

But what about social media? You may have a company newsletter or blog, or be active on LinkedIn or other social media platforms.

‍

Save these platforms for later in the process so your clients will feel like you touched base with them personally first.

‍

Once everyone knows about the increase and has had some time to process it, you can post on social about all the good things that have happened as a result of it. That can reiterate the benefits of the increase to your current clients and help you reach new ones too.

3. Create an FAQs

An FAQs doc answering anticipated questions about the increase can also be a good idea. You can include this in an email or on your website once everyone knows about the rate hike.

‍

While not the most personal, FAQs give clients the option of quickly looking up an answer. And if you can make their lives easier, that's just one more win.

Keep Customer Satisfaction High After a Rate Increase

Following our suggestions above won’t take away the pain of a rate increase completely but may help soften the blow for your clients. 

‍

By planning ahead and crafting your message carefully, you can turn potentially negative news into a way to remind your clients of all the reasons why they chose to do business with you in the first place.

‍

So now that you know what to say, it’s time to get to a keyboard and start working on some positive and proactive messaging for your business.