How to Write a Price Increase Letter [Tips, Examples, and Free Template]

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If you’re like most business owners, you periodically have to increase prices to stay ahead of inflation and maintain your company’s profitability. It can be a tricky situation, but sometimes it’s necessary. 

But a sudden or unannounced price increase can dent your revenue, push your customers away, and even damage your reputation. As such, it’s inevitable to handle your price hike strategically and smartly. 

So, how do you go about increasing prices without losing customers? One way is to write a price increase letter. This post will discuss how to write a price increase letter that sounds polite and professional and doesn’t cause backlash from your customers.

The Reasons to Increase Your Prices

First things first, what is your justification for a price increase? Be sure to justify the increase in your product or service price to avoid losing your customers. If you are looking for the price increase justification example, you will find it below.

Here’re some reasons you may want to increase your price:

Increase in Production and Distribution Costs 

Inflation is getting out of hand in every business sector. From SaaS companies to those selling tactile products, keeping up with production costs is difficult for everyone. If your raw material or labor force has become expensive, you cannot help but raise your product prices. Plus, increased taxes and distribution costs can also justify your product price increase due to inflation letter.

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Service and Product Improvements 

Product quality improvement and integrating new features into your products or services can help you increase your prices without losing customers. But make sure the new features or quality improvements help your customers grow their businesses. 

Business Diversification 

You started as a small business and are now on a growth trajectory. That’s great, but this can be unpleasant news for your existing customers because they’ll have to pay premium prices now. Your business expansion shall be supplemented with new and more exciting services or benefits for your current customers. In other words, you shall offer your customers more value and options so they don’t feel like they’re paying more for less.

Raised Quality Standards

You can have a solid price increase justification if you have started getting your products or materials from a high-end source known for its quality standards. Even when there are no apparent changes in the product, if you have raised the overall production quality, you can roll out a price increase letter to customers.

How to Let Customers Know About a Price Increase

Here comes the tricky part. You have decided to increase your prices, but how do you break it to the customers? The price increase is not good news for anyone. But with a bit of planning and strategic sense, you can have your customers accept your new prices after receiving the price increase notification.

Sure, you may lose some customers in the short term, but if your price increase letter is well-written, most of them will stick around. And some of your lost customers will soon come back to you. Plus, the benefits of retaining most of your customers at your new price tier will be way higher than losing a few customers. 

How can you create a notice for price increase that convinces most of your customers to accept the new pricing? Let’s have a look!

Tips for Announcing a Price Increase to Your Customers

Here’re some practical tips on how to write a price increase letter that won’t trigger a backlash from most of your customers.

1. Be Firm and Authoritative in Your Decision 

A product price increase notification doesn’t have to be apologetic or explanatory but professional. It is a good idea to incorporate a notice for price increase, where you briefly explain the reason for your recent price hike and address customers’ concerns alongside. This proactive communication ensures transparency and fosters understanding, maintaining a positive relationship with your clientele. You may want to mention the exact cause, such as increased distribution costs, or simply tell that the price increase was long due.

2. Justify the Price Hike Through Value 

Customers understand that no product will always sell at the same price. Things change with time, and so should your product price. But, it’s wise to explain your product value to justify the new price. Portray your modified prices by painting a positive picture of your product and letting the customers know the new price is worth it!

3. Avoid Sending Essays 

Some businesses send out comprehensive price increase letters to sound compassionate. But did you know that this approach doesn’t sound professional? Long emails and letters often end up in the readers’ spam box, and you don’t want that to happen with your price increase letter to clients. Instead, compile a short sample letter to inform customers of price increase for different communication mediums. 

4. Add a Personal Touch to the Letter 

While it is good to be professional, a price change email without a personal touch may damage your reputation. So, instead of sounding like a robot, your notice for price increase shall sound like a human wrote it. Personalized pitches bring better results because it helps make the selling process more compassionate. Use your copywriting skills and AI tools like ChatGPT to address the readers’ concerns and sell your new price without being pushy or salesy.

5. Provide Them a Leeway 

It is good to offer a smooth exit for customers who don’t want to continue with the new price. For example, it is a professional practice to unsubscribe or end the paid service in your price change email. Plus, you may want to link your price increase notification to an FAQs page to clarify things for the readers and help retain your customers at the new price. 

Using LinkedIn as your primary business and customer connection tool, you can easily create an automated outreach on LinkedIn for your clients using the same tips above.

Price Increase Letter Examples

Now that you know how to create a results-oriented price increase letter, let’s have a look at some practical, real-world examples:

Example 1: Price Increase Letter for Free Users 

Example 2: Price Increase Email for Long-Term Clients

Example 3: Price Increase Notice for Small or Medium Business 

Example 4: Price Increase Notice for a Subscription-Based Service

Example 5: Brief Notice for Price Increase

Cost Increase Letter Template

If you aren’t clear about a price increase letter format, you might miss some critical information while writing one. That’s where a price increase letter sample can help you put all relevant information in your notification.

Here’s a cost increase letter template for inspiration:

Dear XYZ,

We’re on a mission to be the most affordable and accessible SaaS provider for your business. But several market factors, including the raised server expenses and currency exchange rates, pushed us to take a step.

The never-ending wave of inflation has hit us, too, forcing us to raise prices. We’ve tried to delay this hike for many months, but it’s time.

We’ll be increasing our service charges from $18.99 to $20.99 per month from January 2024.

But the good news is, you’ll get one-month extended services at the current price because you’ve been with us for a while now. You’ll receive another notification when the new price is effective. Till then, use our service to hit your milestones; you got this.

We appreciate your trust in us, and we’ll always keep up with our standards. If you have a question, contact our help center or call us at — — —-, we’re always there to help.

Mike Trevor

XYZ.com

Conclusion

Business is tough, and depending on the market situation, it makes sense to adapt accordingly, so your business keeps thriving. But not everyone will be happy with your decision, especially your customers. One such situation is announcing a price increase to the customers and clients because you will surely hear some backlash for this decision. Even when your price increase is justified and well-timed, some people will still be unhappy. 

But when you announce your price increase strategically and professionally, you can maintain a good ROI without losing your existing customers. Your price rate increase letter will determine how your customers react to a rate change; you cannot go wrong with it!

Make sure to start the transition with the help of your team members and get their consensus for the hike. When everyone is on the same page, you can craft a smart price increase notice or letter to get the ball rolling. Be firm in your stance and briefly elaborate on the reason for this change to keep your loyal customer base intact. 

Good luck raising prices and earning a good ROI!