It happens to every business. There's been a change in your industry and as a result, the resources and services needed to produce your product cost more. Now, you have to tell your customers, who have been loyally standing by you for years, that you have to raise prices.

You're probably putting off the conversation, worried about how customers will react. It almost feels like you're letting them down. After all this time that they've dedicated themselves to your business, you're repaying the favor by increasing prices?

Have no fear. Most customers expect that the cost of their beloved products won't remain stagnant forever. However, if a competitor's prices are staying firmly put, this could potentially put you at risk for customer churn. It's essential that you handle a price increase quickly and authentically, to ensure that your customers understand the situation and are willing to stick through it.

In this post, we'll explain what a price increase justification is, then we'll review some best practices you should consider when breaking the news to your customers.

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Price Increase Justification

This conversation is never easy to have with customers. After all, who wants to hear that the product your business relies on is going to cost more?

No matter how well you communicate this change, your customer service team should expect some negative reaction. If you aren't seeing anyone complain about higher prices, then they're still probably too low. This leaves it up to your discretion whether you want to increase revenue or maintain customer satisfaction.

If you're experiencing pushback from your customer base, then it's helpful to sync your sales and customer service teams. Both departments should align when it comes to how you communicate this price change. This will provide customers with consistent information as they transition conversations from sales reps to service reps.

In general, the best approach your team can take is assuring customers that the increase will help maintain product quality. Customers who are dependent on your products will be more understanding of this reasoning and will want you to maintain the high-quality that they're accustomed to.

HubSpot's Chief Customer Officer, Yamini Rangan, reflects on this approach in the quote below.

"Some price optimizations were successful and others weren't. But, the ones that we communicated well were always value-driven." - Yamini Rangan, Chief Customer Officer at HubSpot

If you're not sure how to begin the conversation, take a look at some of the best practices below before you get started. 

6 Tips for Announcing a Price Increase to Your Customers

1. Announce the price increase directly to customers.

Imagine if your Spotify Premium bill increased from $9.99 to $14.99 per month without your knowledge or consent. You would be pretty mad, right?

It's completely unfair for a customer to suddenly find out there has been a price increase in their product. If a price increase occurs, make sure you go through your list of all customers who use that product and let them know about the change. If possible, it's an added bonus to address each letter to each individual customer to further personalize the process.

2. Let customers know well in advance.

You should provide your customers with plenty of time to come to terms with the price increase. They may need to re-assess their budget or consider alternative options, so you should keep them in the loop as soon as you're made aware of the situation. Additionally, you should encourage them to make one or more orders of the product before the price increase kicks in.

3. Remind them that higher prices mean better quality.

It can be confusing to customers why a price increase would be necessary, especially if they've been purchasing the same product for months or years. This makes it vital that you stress the importance of product quality.

Typically, products increase in price to match higher operating costs, increases in hires, or increases in prices of materials. To ensure the same level of high quality, sometimes you have to raise the price.

4. Explain the reasoning behind the price increase.

To make it clear that you're raising the prices to maintain the quality of the product, you should explain what caused the price increase. For instance, as some raw materials become increasingly scarce and expensive, companies that utilize these materials are forced to increase the prices for products that use them. Laying that out to customers will prove your willingness to be transparent.

5. Ensure the entire organization is aware of the price increase before announcing it to customers.

It would be embarrassing if a frontline worker wasn't made aware of the price increase and accidentally charged a customer the original price of the product. Even if all employees were made aware of the situation, they should all be on the exact same page in terms of the cost-difference, the reasoning, and the logistics moving forward. That way, your company has a consistent voice on the matter.

6. Allow customers to reach out with further questions or concerns.

You want to be sure your customers receive all the information they require. A lack of information could cause them to churn to a competitor with lower prices. Reassure them that they can always reach out to anyone in your company — including high-level executives — with any more questions or concerns that come up regarding the price increase.

Have a price increase coming but still not sure how to say it? The tips above have been included in the following examples of price increase letters that have been sent to real customers.

Price Increase Letter

It's important to let your customers know about an upcoming price increase, but telling them can sometimes be tricky to phrase.

free Price Increase Letter template

If you're stuck, take a look at some of the different ways you can format this message using the examples below.

1. General Price Increase


This is an example of a letter that lays out a general price increase to customers. It states the exact percentage of the price increase and which products will be experiencing the higher cost. The letter also states exactly when the price increase will come into effect and reminds customers of how long they have to order their products at the current price.

2. Increase in Cost of Materials


This letter also states the exact percentage of the price increase and when it will go into effect. It gives a specific reason for the price increase: the "ever increasing costs of raw materials, manufacturing, and transportation with the common theme being the cost of oil and oil-based products globally." It's even a bonus that the company adds how they have prioritized limiting their environmental impact while still providing high-value products to their customers.

3. Increase in Operating Costs


Like the others, this letter states the percentage of the price increase and when it will go into effect. The letter begins by stating that the increase is due to "additional material and overhead increased costs," which gives customers a clear reason for the change. It's helpful that the company also lays out the exact products that will be experiencing a larger price increase than the rest to avoid any confusion from customers.

Based on these examples, you can use the template below to create your own price increase letter to send to your customers.

Price Increase Letter Template

[Date] [Organization Name or Logo] [Address]

[Customer's Name] [Email]

[Address] [Phone Number]


Dear [Customer's Name],

This letter services to advise you that there will be an increase of [Percentage] on [Products and/or Services] to be put into effect on [Date]. This increase is due to [Reason].

[Company Name] is committed to offering you the quality you expect and deserve. We have found a way to minimize the price increase to the least possible amount while still achieving our desired goals.

All orders made before [Date] will be honored with the current price, so we highly encourage you to order soon to take advantage of this.

[Company Name] greatly appreciates your continued business and support through this time of growth and change. If you have any further questions or concerns regarding this price increase, please do not hesitate to reach out. Our team is more than happy to discuss this situation with you


[Sender's Name]


For more information about keeping your customers loyal, read our guide to customer retention.

Editor's note: This post was originally published in March 2019 and has been updated for comprehensiveness.

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Originally published Aug 7, 2020 3:36:00 PM, updated August 07 2020


Customer Retention