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

How to Write a Price Increase Letter – Tips, Examples, and Free Template
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Last updated: January 5, 2022
Reading time: 6 minutes

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. Read on!

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. 

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 gotten expensive, you can’t help but raise your product prices. Plus, increased taxes and distribution costs can also justify your product price raise.

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 now you’re 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 more value and more options to your customers, 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 let the customers know.

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. 

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. 

But how do you write a price increase letter that can convince most of your customers to accept the new price? 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 briefly explain the reason for your recent price hike in the notice and address the customers’ concerns alongside. 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 let the customers know that 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 brief but authoritative notice for different communication mediums to keep your customers in a loop. 

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 shall sound like it was written by a human. Personalized letters bring better results because it helps make the selling process more compassionate. Use your copywriting skills 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 letter to an FAQs page to clarify things for the readers and help retain your customers at the new price. 

If you use 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: A 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 Price Increase Notice 

Price Increase Letter Template

If you aren’t clear about a price increase letter’s 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 into your letter. 

Here’s a price increase 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 our 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 2022.

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

That’s a Wrap

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 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 rate increase letter will determine how your customers react to a price 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!

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FAQ

It’s called a price increase when you raise your product or service charges because of the market and business dynamics.

Directly address your customer, explain the reason for a price increase, and prove its value to the readers. To sound more compassionate, you can customize a price increase letter for different customer segments.

An increase in raw material prices, currency exchange rate fluctuations, new taxes, and reduced ROI are the primary reasons businesses increase costs. Some companies also increase their prices to raise profits, especially when they have established a reputation and developed a loyal customer base.

Showing compassion and addressing the customers’ concerns are two critical components for a smooth transition. Plus, offer better quality and more value.

Most businesses raise their prices once a year. Increasing prices more often can turn off your customers. On the other hand, not raising your price for an extended period can affect your bottom line and restrict your business growth.

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