How to Tell Customers About Price Increases: 11 Tips & Examples

Increasing prices at your business can be nerve-wracking.

While it may mean your small business is growing, it isn’t always easy for your customers … particularly if you’ve developed a close relationship with them.

While I can’t promise a customer or two won’t stray following a price hike, I can provide a few tips and tricks on how to tell customers about price increases to make the transition easier.

How to Tell Customers About Price Increases: 11 Tips

Here’s a list of tips to help you tell customers about price increases. After that, I’ll share a few examples and templates you can use at your business.  

1. Tell your customers up front.

When prices increase, don’t be shy about informing customers. The last thing you want is to surprise them with a big bill after a routine purchase. Be upfront with them. Tell them when the price increase will happen, which products or services will be affected, and why you’ve decided to raise prices. It’s important to be clear so they know exactly why you’re doing this. 

Here’s an example from a dog daycare. My friend received this email explaining why the business was raising prices:

Here’s what I like about this email: It’s genuine — you can tell the business cares about its customers and how they’ll react to this news. I also love that it offers limited-time deals to those who might be upset by this and consider leaving. It gives them a reason to stay and reinforces the value of their loyalty. 

2. Be honest, but strategic. 

As your small business grows, price optimization will sometimes be necessary. But the reasons for doing so can vary:

• You have more work than you can handle
• Your skills and services are evolving
• Your business expenses or overhead costs are increasing

Providing context as to why you’re upping the cost of your products or services can go a long way in building trust. But keep in mind not to over-explain your reasons for doing so. Too much information can confuse clients and cause them to question your pricing.

Rather, focus on how the increase in cost is benefiting them. For example, let them know if you’ve recently completed a course or training and can now provide a superior service. That shows their dollars are going back into your business, leading to a better experience for them in the future. 

3. Be proactive.

It’s important to take control of the situation and proactively inform customers about impending price increases. The higher the increase, the sooner you should let them know. This will show that you aren’t trying to be sneaky and appreciate their business.

Informing your customers in advance also provides an opportunity to resell your services. If they know a price increase is coming, you can give them the option to purchase your product or service in advance at a lower cost. They’ll be happy that they got a chance to buy before the increase hits. 

Ski mountains do this at the end of the season. They’ll promote a limited-time deal for next year and encourage you to buy before prices increase. 

4. Stand by your decision.

Increasing prices isn’t a decision that’s taken lightly. You’ve put time and energy into making the right decision for your business, so stick to it.

While it’s important to understand that your price increase may impact your customers, don’t apologize for it. Remember, as a business owner, keeping your doors open costs money, and often, you’re at the mercy of market changes and external factors that are out of your control. Plus, an apology may cause your patrons to question the reasoning behind the price hike.

If you have employees, ensuring your team understands the upsurge and rationale behind your strategy is equally important. You don’t want the same customer booking appointments with two different technicians, only to find that one is charging less than the other. This can confuse customers and make them wonder if the price increase is being distributed selectively.

5. Make a smooth transition.

Price hikes are anxiety-inducing, no matter the reason. At the end of the day, people aren’t going to like paying more for your products and services. It’s important to ensure a smooth transition so customers stay loyal to your business.

Here are a few things you can do to create a smoother customer experience during a price increase:

• Communicate updates regularly. Make it clear that you’re raising prices and remind customers a few times before the date. 
• Give customers some time. Not everyone will be ready for your price increase, so it’s best practice to give your customers a month or so to prepare. 
• Offer temporary alternatives. To avoid losing customers, you can offer limited-time deals like price locks and tiered plans that encourage people to stay loyal to your business.  
• Ask for feedback. Give customers plenty of opportunities to voice their feedback through surveys and check-ins. It’s important to show customers you value their opinion. 

6. Create additional value.

Every customer wants a fair deal. For example, you can buy a steak anywhere. But it’s cheaper at the grocery store than at a nice restaurant. Why? A professional chef hasn’t prepared the grocery store steak, seasoned it with premium ingredients, or cooked it to a certain grade. That additional value that the restaurant provides is why its steak costs more than the store’s. 

Most people understand these price differences because they’re getting additional value for their dollar. By altering your product or adding features to an existing service, customers will feel that the value is worth the increased price.

7. Roll out new costs slowly.

If you’re worried about how customers will respond to a price increase or are hesitant about your new pricing plans, ease your customers into it. First, test it out with a small group of clients to see if there’s a negative response. This will allow you to gradually test your new and improved product or service at a higher price. Not only does it give you valuable insights, but it also provides opportunities to make adjustments before a formal announcement.

8. Avoid raising prices across the board.

If you raise prices across the board, it will look like all of your products and services are becoming more expensive, and it will be harder to show the value behind the price increase. 

Instead, try raising prices on select products or services. Your most popular offers are typically your biggest revenue drivers, so raising prices on these products and services will have a larger impact on your revenue while still providing lower-cost options.

This also forces customers to consider the product or service’s value by allowing them to compare it to a cheaper option. A decision must be made from the customer’s perspective, forcing them to focus on the product or service’s value rather than just the price.

9. Consider pricing tiers.

Consider adding tiered options to your products and services. For example, a spa could offer a deluxe facial at a new, higher price while offering a basic facial with fewer features at a lower cost. As mentioned above, this forces the customers to consider the product or service’s value.

10. Do what’s right for your business.

Whatever the reason, raising prices may be necessary for your business to succeed. While customers may not like it, sometimes there’s no way around it, and you have to raise prices to stay in business. 

Here’s the good news – it’s better to act sooner rather than later. If you need to raise prices, don’t hesitate to let customers know immediately. It will be better for your business, and customers will get over it sooner. Like a band-aid that you just need to rip off, sometimes you just have to do what’s right for your business and move forward. 

11. Remember: Not everyone will love you.

Some people will only work with your company if the price is right. Raising prices may cause them to jump ship and look for similar products and services at a lower rate.

This doesn’t mean you should lower your prices to accommodate them. Instead, they probably aren’t the right customer for your business. Raising your prices while concurrently providing quality products or services can attract new customers. These customers will value your quality rather than simply focusing on a smaller price tag.

Now let’s look at a few examples and sample letters that you can use to tell customers about price increases at your business. 

How to Tell Customers About Price Increase: Email

Here are three email templates (and examples) that you can use to tell customers about a price increase:

Email Template #1

Use this email to announce the price increase and explain its context. 

Example:

Email Template #2

Use this email to remind customers about your price increase. Mention the date, products/services, and other relevant information. 

Example:

Email Template #3

If you’re offering limited-time deals like price locks and subscription plans, use this email to promote those options.

Example:

How to Tell Customers About Price Increase: Sample Letter

Direct mail is still a very effective channel for customer communication. In fact, it has a higher open rate than email, and people of all ages engage with it. It’s a very personal way to inform customers about a price increase because you deliver a message to their front door. Bonus points if you sign the letter and provide options to contact you for follow-up questions.

Here’s a sample letter you can use to let customers know about a price increase: 

Increasing Prices at Your Small Business

Price increases aren’t fun for you or your customers. People don’t want to pay more, and you don’t want to disappoint those loyal to your company.

However, if you want to grow your business, you must be willing to increase prices. It’s not easy, but you can set your business up for success with the right strategies and practices. Use the tips in this post to get started, and borrow the templates above to clearly communicate your price increases to customers.