Dreading telling loyal customers that you have to raise 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 not increasing, this potentially puts you at risk for customer churn. You must handle a price increase quickly and authentically to ensure that your customers understand the situation and are willing to stick through it.

→ Access Now: Price Increase Letter [Free Email Template]

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

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 at least a few negative reactions. 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, 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. It will provide customers with consistent information as they speak with both sales reps and 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 Executive 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 Executive 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.

1. Contact them directly.

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 unfair for a customer to suddenly find out there has been a price increase in their product. If a price increase occurs, go through your list of customers who use that product or service, and send a price increase letter notifying them of the change. If possible, address the letters to each customer to 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 once you're made aware of the situation. Additionally, encourage them to make one or more product orders before the price increase kicks in.

3. Remind them that higher prices mean better quality.

The necessity for a price increase can be confusing for customers, especially if they've been purchasing the same product for months or years. It 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 needed 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 for a frontline worker to accidentally charge a customer the wrong price because their company failed to notify them of a change. Even if all employees were made aware of the situation, they should all be on the 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? Check out the following price increase letter templates to help you put it in the right words.

Featured Resource: Price Increase Letter Template

Price Increase Letter Templates

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

If you're stuck, take a look at the templates below for ideas on conveying the message to customers.

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, providing transparency that many customers will understand. To make this message more impactful, consider adding the value that the price increase provides to 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 a clear reason for the change. It's helpful to lay out the exact products that will be experiencing a larger price increase than the rest to avoid any confusion from customers.

Based on these templates, you can use the format below to create your price increase letter to send to your customers.

Sample Price Increase Letter Template

sample price increase letter template

Keep in mind that you'll want to adhere to the tone that you've set during the customer relationship so far, while being transparent and personal every step of the way. Templates can help provide the necessary professional context for price increases and other challenging topics, but be sure to customize them for maximum impact.

 

50 Customer Service Email Templates

Click here to download a free price increase letter template, available exclusively in HubSpot's 50 Customer Service Email Templates Kit.

How to Write a Price Increase Letter

Delivering notices of a price increase shouldn’t bring a sense of dread. With the messaging tips below, you can make things easier for your team and customers.

1. Be clear and concise.

Customers shouldn’t have to guess or assume what your correspondence means. Communicate the important information at the beginning of the notice, letting them know explicitly what the new pricing will be and when it will take effect. Outline any steps customers need to take before the increase happens. Next, explain what their options are and where they can get more information.

2. Be empathetic.

Depending on your industry, the language you use for written correspondence may need to be more formal, but it shouldn’t come across as cold. The Netflix letter above is a great example of being both personable and professional. It makes customers feel that their business is valued and that the company sees them as more than just a number. Put yourself in your customer’s shoes and think about how you’d like to receive similar news while drafting the letter. Additionally you’ll want to thank them for their business before signing off.

3. Don’t apologize.

Companies raise prices all the time and it’s a completely normal aspect of doing business. Apologizing will not only make the reader think you’re unsure of the decision, but also creates unnecessary awkwardness. Your product or service provides excellent value and you should charge accordingly.

4. Send a follow up.

Email notices can easily end up in spam folders and customers can mistake physical letters as junk mail. To combat this, it’s good to send a follow up notice before the increase goes into effect. It will also give a bit of cushion for customers who maybe read your first notice, but forgot to follow up or take action to renew. Additionally, it will decrease the chances they’ll feel blindsided by an increase.

With these templates in hand, let’s go through some best practices for making your price increase announcement.

Price Increase Letter Examples

You have the tips. You have the templates. How do they work in real life? If you are a paid member of any subscription service, chances are you have received one or two price increase letters in your email inbox. Amazon Prime is a popular company you might have witnessed increasing prices over the last few years. They are not the only ones. Let’s take a look at examples from Spotify, Disney+, Upwork, Hulu, and Netflix.

1. Spotify

price increase letter example: spotifySpotify sent an email to its premium Family Plan members about an incoming price increase. The Family Plan is a discount plan for up to six family members who live together to enjoy Spotify Premium accounts. With the change scheduled to happen only four days after the email was sent, one might believe that Spotify blindsided its loyal customers. Diving further into the email, that would prove false. While we cannot be certain that they notified their entire organization before the announcement, this price increase email hit on the five tips listed above.

One, they contacted their premium Family Plan members directly through email. Two, they let customers know well in advance. Although the change would be effective four days following the email, Spotify gave their subscribers an extra month with the previous cost. It would give customers time to decide whether to cancel or keep their subscription.

Spotify combines tips three and four into the same statement: “...we are increasing the price of Premium Family Plan so we can continue to bring you new content and features that you can enjoy…” Their reasoning behind the price increase is to provide customers with better quality.

And lastly, after the body of the email, they prompt customers to follow up with any questions with their support staff.

Short, sweet, and to the point, this price increase email is an ideal example to imitate when you write your own letter.

2. Disney+

price increase letter example: disney plusLike Spotify, Disney+ announced a price increase to “The Disney Bundle'' subscribers. This bundle includes subscriptions to Disney+, ESPN+, and Hulu. The email informed customers of a price increase to $13.99 (previously $12.99). Disney+ touched on many of the tips listed above, but they also missed a few.

The streaming platform notified customers directly via email. Disney+ also gave three weeks to decide between keeping or canceling a subscription. This price increase letter closes out with a call-to-action for customers to visit their Help Center for questions. While customers had ample time to decide or reach out with further questions, this example fails to tell them why their subscriptions increased.

Remember, Disney+ launched in November 2019. Compared to Netflix and Hulu, which launched in 1997 and 2008, respectively, the platform is very new. One could anticipate that customers were curious why their subscription price was already increasing after a relatively short time. While an article from CNN Business explains the reasons behind the increase, Disney+ did not share these reasons with customers in their email announcement.

3. Upwork

price increase letter example: upworkUpwork, one of the largest freelancing websites, announced a price increase to its Freelancer Plus plan members. This paid plan is a step-up from its free Freelancer Basic plan. It allows freelancers the added benefits of keeping their earnings confidential, customizing their profile URL, keeping their profile active during breaks, and more.

While this price increase letter is significantly longer than the previous examples, it is still concise for the level of change explained. That is not the only thing this letter does well. After this email, the Freelancer Plus plan members had a month to sit with this information. To explain the reasoning behind the price increase, Upwork includes a section titled, “Why are we making this change?” One can assume that this price will greatly benefit Upwork, but the email focuses on the benefits to the freelancers.

At the close, this email does not prompt freelancers to reach out with further questions, but it does direct them to learn more about the changes happening to their membership. With Upwork being a platform where freelancers spend and make money, this price increase letter covers enough touchpoints to efficiently introduce customers to the change.

4. Hulu

Hulu price increase letter example

5. Netflix

Netflix Letter

Netflix took a much more effective approach in their price increase messaging. Like Hulu, they sent notice well in advance but also took the opportunity to remind customers how their service adds value.

“This update will allow us to deliver even more value for your membership — with stories that lift you up, move you, or simply make your day a little better.” It perfectly sums up why customers should stick around despite the increase.

Overall, Netflix’s tone is warm and personable while still hitting all of the best practices listed above. To further retain customers, the company added a list of new releases and top picks in the footer to retain loyal customers — showing them all the great content they’ll miss out on if they were to cancel their subscription.

Incoming: Price Increase Notice

If you have made it this far, you probably have a price increase notice on the horizon. Don’t procrastinate. Your customers have signed up for a product or service, and they deserve ample time to make a decision. Most customers anticipate increased costs in the future. Follow the tips listed in this article, and keep moving forward.

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

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Originally published Jan 5, 2022 7:15:00 AM, updated January 05 2022

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