March 30, 2021
Business Growth
11 min read

How to Announce a Price Increase to Your Customers?

Learn how to increase the price and still make customers happy.

Ben Bitvinskas
Co-founder, Atlasmic
Price increase announcements are always tough to get right. It’s not something that your customers would like to hear, so every aspect of the revelation matters all that much more. The choice of words, the order in which they are presented, tone of voice, visual effects, etc. As always, there is never a single best approach to an announcement of a price increase. In this article, we’ll take a look at the areas you should focus on, as well look on the pitfalls and traps that you could avoid!

First of all – understand that almost every business does it

Even though we fully understand that it might be unnerving to announce a price increase, you can compare prices of goods and services over time, and every business has done a price increase at some point. Let’s take a look at the chart below.
Internet streaming giant Netflix bumped up their service price by 60% for their standard plan, around 33% for their Premium plan and only 13% for their Basic plan. The same applies to almost every good and service that you can find on physical and virtual store shelves. Due to inflation, quality improvements and other changes, the prime costs might tally up over time, forcing you to raise prices.
However, more important than the actual fact of price increase is the way you choose to communicate it. It’s one thing to just be greedy and raise prices while it’s another to justify and be transparent with the whole process. Let’s dive more in-depth and see how you can do great damage control or have no damage at all with the inevitability of the price increase.

Choose a transparent & direct method

First and foremost – you must announce the price increase directly to your customers. It’s considered to be one of the biggest PR mistakes if a business doesn’t publicly announce the upcoming changes.
For the most part, businesses choose to put the announcement in writing. If you do a video – it’s much riskier to make it seem entertaining or have too many negative emotions attached to it (in the form of dislikes, angry comments, etc.).
It’s super important to choose a communication outlet which can reach the highest number of customers. This is a major reason why you should consider putting the news on every single news feed at your disposal. Send email newsletters, put them on your website blog, on social media, notify customers in the app, if you have one, etc.
Price increase announcements are a project that you should put a dedicated staff on. Make sure you have a plan that you’re going to follow, professional copy, written specifically for the announcement and as many resources available, to handle requests and inquiries, which are likely to pile on, after you put the news out there.
So, to sum up, we recommend writing a designated newsletter which announces the price increase. Don’t evade the issue and rather face it head-on. Place the news on your website, send the newsletter via email, and post it on your social media feeds. Designate staff to handle the process and it all should be alright!

Justification & explanation & pricing revision

The price increase has to be justified. Some analysts claim that a mere 1% price increase can help boost profits by over 10%. Market insights always suggest that businesses should be less hesitant towards raising the price because it’s the more efficient solution long-term, opposed to expanding and trying to sustain high-quality service at the same price.

Justify the price increase

However, your price increase can’t be done out of the desire to earn more and grow your company. Think about it from the customer’s perspective. Let’s say they're paying 10$ per month for your service. They could be open to paying 15$ per month if you’d:
  • Improve your service
  • Add new features
  • Give them perks and bonuses
So, if you announce a price increase without justifying why it’s being done, you’re just digging your own grave.

Explain the increase

Your customers would like to know why the increase is being done. Just as we mentioned in the paragraph above, make sure to explain what extra value they’ll be getting in return. Don’t write sentences that are too long, go straight to the point and don’t apologize for it.

Understanding your pricing strategy and pricing revision

With that being said, let’s step back a bit, and let’s see how you can justify a price increase. To begin with, your company has to identify the most applicable and pick the best pricing strategy. There are around 10 different pricing strategies and regardless of whether you thought about it or not, your current pricing plan has to fall into one of the following categories:
  • Demand pricing – prices change according to demand, supply.
  • Skimmed/reduced pricing – reducing the initial price over time, until the product or service ends its life cycle
  • Best-value pricing – using focus groups and research, you determine and find the best price according to your competition and service quality
  • Competitive pricing – setting the pricing very similar to your competitors
  • Pricing by tiers/Tiered pricing – tiers according to quality of goods/services
  • Aggressive pricing – lowering the prices below your competition in order to increase brand exposure
  • Overhead cost-plus pricing – you can calculate it taking the overhead sum with the wanted profit.
A price increase isn’t always as blatant as raising the price. For example, if you have three different service tiers, two tiers could be priced aggressively while the last one could be priced competitively.
Our suggestion would be to avoid huge increases at once. For example, limit price boosts to 30-40% and don’t do it more than once every 24 months.

Make the transition as seamless as possible

The most crucial aspect of announcing the price increase is the transition for your customers. Your goal, as a business, should definitely be to make the transition as seamless as possible.
Our advice regarding the transition:
  • Inform the customers as soon as you make the decision to raise prices
  • Leave the current contracts the way they are until they expire
  • If an existing, long-term customer is on a pricing plan that will increase in value, you can leave the existing rates for up to 730 days (24 months) to show your willingness to make their transition easier
With that being said, you should also encourage them to upgrade their package or buy more stock in advance before the price increase kicks in. Be clear about the deadline and upcoming terms but most PR firms and businesses who went through this experience, recommend leaning towards being more generous rather than strict. It should reduce the customer churn rate while simultaneously improving the prestige of your brand.
Don’t force anyone to make a decision as soon as possible. A lot of businesses might need some additional time to consider whether the increase in expenditures will be worth their end. If you give them enough time to think about it, more often than not, the answer will be positive and you will retain a loyal customer. Try to remember that a solution might seem easy from your end, while at their headquarters or home, serious considerations could be taking place.

Leave the possibility to opt-out

When you announce a price increase, if it’s done in a sensible, considerate, transparent and justifiable way, you can expect to retain anywhere from 75% of your current customers, all the way to 95%. However, depending on your market and the competitiveness of the field, figures could slightly vary, but if you do it right, expect to maintain stable revenue across the board.
This particular point depends on your solutions and choices. If you decide to go through with the price increase, it’s important that the customer doesn’t feel pressured to pay more right away. They should feel like they’re making the decision on their own. Make it an option and possibility to opt-out with the eligibility for refunds and reimbursements of payments made upfront.
Once again, try and maintain goodwill, ethical business practices throughout the process. Set a timeframe for when customers have to make up their mind but don’t set the deadline too soon. Make it at least 60 days for the date to opt-out.
Furthermore, remember when we mentioned benefits, bonuses and perks? You can also reduce churn rates by offering temporary incentives and benefits for customers that stay throughout the price increase process or even upscale their business. For example – free subscription for 3 months, 50% reduced shipping costs, free upgrade to a higher-tier package for 3 months, etc.
You can also automatically upgrade their service tiers and packages for the time being (they won’t mind, trust us). Until they have to make a decision, show them why your service might be worth the extra spending.

Tips for writing the price increase letter

As mentioned before, writing and letters seem to be the most suited form of communication for price increases. However, writing a good letter could prove to be a steep hill that’s actually quite difficult to climb. We recommend hiring a professional copywriter (if you don’t have one on board) who can write engaging, warm, professional and savvy text for the customers to read.
Remember that when reading, existing customers shouldn’t feel any pressure or apologies for the price increase. Instead, your words should focus on the future and what benefits will the added cost bring. So, here are some pointers for when writing a price increase letter:
  • Set a structure – the letter has to be well put together. There shouldn’t be any thought gaps within the text or grey areas up for interpretation. Be concise, direct and go straight to the point.
  • Speak with a more down to earth tone, even if your brand language is somewhat different. Try to seem empathic but avoid sucking up or making it sound too sweet.
  • Clarify why the price increase and personalize the letter to inform customers how their payments are going to change
  • State the benefits & say why the price change is inevitable or needs to be done
  • Thank your customers for their contributions to your business or support for your cause
  • Sign the letter
Let’s see an example from a fictional company XYZ Inc.
Hi X,
Here at XYZ Inc. we are constantly striving for excellence. Our team and shareholders are committed and focused on bringing you goods and services of only the highest quality.
With increasing customer demand for innovation and the desire to remain committed to these fundamental values, we are announcing a price increase as of
The prices for our subscription-based service packages will increase by 15% across the board. This increase will allow us to continue providing excellent service and continuously improving in the near future. In addition, XYZ Inc. will use the additional funds to:
reduce server latency, add more content to the database and implement a new credit system.**
We are thankful for your contribution until now and we hope that you will remain with us after the changes take effect. Until that time, to help you make up your mind, we are giving you
a 3-month-long free trial of our Premium package with access to even more perks and content. ***
Best wishes,
Adam Smith, CEO of XYZ Inc.
*- add the date of when your changes take place, remember to leave at least a 60-day interval for them to make their minds up
**- list how the price increase will benefit the customer
***- add a benefit or some incentive to help them make the decision to stay with you!


All in all, the price increase is a difficult process to cope with, regardless of how you go about it. The project requires planning, setting the right strategy, direct but efficient and warm communication and some ingenious marketing tricks to help you out.
We hope that this article gave you some ideas on how to announce a price increase!
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