Over the last year, I joined many other millennials in the great housing adventure. However, my new abode, unfortunately, requires a significant amount of work. In case you haven’t noticed, materials are exorbitantly priced these days. Headlines are filled with news about the soaring prices of lumber and glass, and supply chain disruptions have resulted in numerous price increase notifications for me. Honestly, I don’t mind. Everyone needs to make a living, and sometimes that involves raising prices.

So, how can you increase prices without alienating your customer base? The key lies in the delivery. That’s why I’m sharing tips on crafting the perfect price increase letter, email, or announcement. We’ll explore:

• Common reasons for a price increase.
• Best practices for communicating price adjustments to customers.
• Examples and tips for writing effective price increase letters.

Why Increase Prices?

Perhaps you’re considering a price increase but are unsure how to justify it. Your customers, employees, and potential clients need to understand the reasons behind the increase, its effective date, and any accompanying product changes. Here are three common reasons for implementing price increases.

1. Rising Costs

Similar to the cost-of-living increases we experience, the cost of supplies and labor naturally rises over time. Is inflation a blessing in disguise? Ensure you can maintain a healthy ROI over time, even after the price increase. While numerous business factors and market research contribute to calculating price adjustments, it’s prudent to anticipate rising costs for each component of your product offering. Is your company expanding? Are the costs of materials or software increasing? Are competitors charging significantly more?

Image source Related: Our partners at LOCALiQ offer advice on adapting your business for improved marketing during inflation.

2. Business Pivots or Repositioning

Businesses evolve. Some may start as the most affordable option, but as they gain a better understanding of their target audience and market dynamics, they might shift towards higher-end customers. Alternatively, if your business is thriving and your team is overwhelmed with orders, subscriptions, or packages, it might be time for a price increase. This can naturally refine your customer base while maintaining revenue streams. Moreover, it allows you to part ways with difficult clients. Simultaneously, you rebrand as a premium company, emphasizing high quality, investment, and rewards—the Lamborghini of your industry. Who wouldn’t want that?

3. Selling Through Retailers

While online marketplaces like Amazon, Grubhub, and Etsy offer convenience, the reality is that suppliers bear the cost. These retailers charge commissions, which businesses factor into their pricing. Customers who use these platforms will understand the need for price adjustments. Explain this clearly and provide ample notice in your price increase communication.

Price Increase Communication: Best Practices and Examples

Informing customers about price increases is never pleasant, but the right approach can minimize churn and negative reactions. Here are nine tips and examples for effective communication.

1. Prioritize Internal Communication

Ensure all teams are aware of the price adjustment. This change impacts every department, directly or indirectly. Customer service needs to address inquiries, while marketing and sales need to understand and communicate the new pricing to existing and potential customers.

2. Direct Customer Communication is Crucial…

This is self-explanatory. Being caught off guard by unexpected price hikes (looking at you, Boston Sports Club) is never a pleasant experience. Practice transparency and clearly communicate the price increase in both the subject line and the opening sentences of your letter or email.

3…Multiple Touchpoints are Key

While prioritizing preferred communication channels is important, consider notifications via direct mail or phone calls, depending on your customer relationships. Use a consistent branded template similar to other company announcements, such as product updates, fundraising announcements, event invitations, or discount offers. This familiarity avoids spam filters. For email communications, adhere to email copywriting best practices, including brand consistency.

4. Provide Ample Notice

Ideally, give customers at least two months’ notice before implementing the price increase, especially for subscription services. This allows them to cancel without penalty or adjust their budgets accordingly. If possible, specify the exact date of the price increase for each customer. Using SQL, you can insert their subscription start date and the price increase date.

5. Segmentation and Personalization are Key

This is standard practice in email marketing, but it’s particularly important for price increase announcements. If the increase affects customer segments differently, avoid generic emails that require customers to decipher relevant information. Segment by plan or service to tailor messaging and highlight crucial details. Consider segmenting by customer longevity to reward loyalty with exclusive offers, such as extending the current price or providing temporary access to premium features.

6. Informative yet Concise

This is a crucial email copywriting tip, especially for price increase announcements. Clearly convey the increase amount, the rationale, the effective date, and any required actions from the customer. However, avoid excessive detail. Customers primarily need the essential facts. Over-explaining can sound defensive and apologetic. Maintain a confident and concise writing style.

7. Avoid Excessive Brevity

While Netflix sends concise emails about price increases, mimicking their in-app notification style isn’t recommended:

While Netflix, being a major player in the streaming wars, might get away with it, their approach feels rather abrupt. It comes across as arrogant, stating, “We’re increasing prices because we’re the best. Don’t like it? Tough. Cancel your subscription. Goodbye.” Don’t be like that.

8. Offer a Dedicated FAQ Page

Your price increase email provides immediate answers regarding the amount, timing, and rationale. However, some situations might be more nuanced. A dedicated FAQ page can address hypothetical scenarios, anticipate follow-up questions, and offer helpful context. This can mitigate a surge in calls and emails while demonstrating that you’ve thoroughly considered the implications and understand your customers’ needs. Adobe, for example, created a FAQ page explaining their price increase in a historical context and highlighting new features.

Here’s another example of an effective FAQ page:

9. Clear Support Channels

Even with an FAQ page, some customers prefer direct interaction, whether for reassurance, negotiation attempts, or complaints. Provide clear contact channels and ensure your support team is well-prepared.

10. Limit Price Increases to Once a Year

Before announcing a price increase, ensure your team is confident that prices will remain stable for as long as possible (ideally, at least a year), even if it means a slightly larger increase to create a buffer. It’s better to deliver bad news only once. Frequent, small increases can seem underhanded. This also simplifies matters for subscription services. As mentioned earlier, numerous business calculations factor into price adjustments, and this is a crucial consideration.

Writing Effective Price Increase Letters: A Recap

While no one enjoys sending or receiving price increase notifications, these tips can help make the process smoother for your customers and foster continued loyalty.

1. Inform all team members first.
2. Communicate directly with customers.
3. Provide ample notice.
4. Segment and personalize emails.
5. Be informative but concise (and avoid rudeness).
6. Offer a dedicated FAQ page.
7. Provide accessible support channels.
8. Limit price increases to once per year, if possible. We’re always on the lookout for good (or bad) examples of price increase letters. Feel free to share them with us for potential inclusion in this post.