Best Practices to Write a Price Increase Letter

A price increase letter is a formal notice that a business will send to its customers to inform them of a price change in their products or services.

Price Increase Letter

Every Business has to decide to increase the prices of their products at a time, and they need to send the price increase letter to their customers then.

Let’s assume you have a food business online, and you have to buy sunflower oil and olive oil for everyday cooking. But cooking oil costs have been raised, which lowers your profit margin. In that situation, you will have no way but to change your pricing policy.

On the other hand, raising the price might make the customers switch to another business to buy products.

There is a way! You can just let them know with a price increase letter via email to help them out. It will give them a chance to decide before purchasing again.

What is a price increase letter?

A price increase letter is an announcement of a business to inform existing customers about the upcoming price increase of their regular purchased items.

Maintaining relationships with existing customers is crucial in online business. Imagine that a regular customer ordered a food item without knowing the price increase from your company. He didn’t check the price as he regularly buys it from you. If he discovered the extra charge when purchasing, he would be really upset with your business strategy, which might make him switch to your competitors. This is quite harmful to your brand image as well.

To avoid this complication, would you be brave enough to send a straight and formal price increase announcement to them via email with proper justification and clarification? It might help your regular customers consider your situation. Your wording and tone play a vital role in announcing the price increment.

Why Increase Prices in the first place?

Businesses need to increase the prices of the products at a point to keep making profits. Various factors influence the price increase.

1Higher Costs of Raw Materials and Labor

Inflation is out of our hands nowadays, and living costs are rising daily, resulting in extra labor costs in the industry. Increasing raw materials and labor costs lowers your profit margin. You will have no way to change your pricing policy to keep making profits when you use a better quality of materials. Maintaining a healthy ROI (Return on Investment) with your pricing policy based on inflation would be the best option.

An example of a price increase announcement from Cardinal Systems, Inc. can clarify the whole situation.

The cause of price increase
2Higher Distribution Costs

If you take orders to deliver products to your customers’ doorstep, distribution costs are a significant concern here. It depends on the transportation factors such as automobile costs, diesel costs, traveling costs etc. Extra delivery costs might also influence you to increase the price of your products or charge additional delivery costs on when to deliver.

An example is worth presenting from One Stripe Chai as they mentioned that the rising shipping costs are one of the reasons for their price increase.

Shipping Cost Causes Price Increase
3Quality Improvements of the Products or Services

Better products represent a better quality of business requiring more expensive materials. Improving the quality meets the best output in the long run. You might have to increase the prices of your quality products to keep making good profits for your business. The more quality development of your products, the more price increase it will need in the long run. 

Writolay shows how the improvement of the products causes their price increase.

Product Improvement Causes Price Increase
4Increased Features in a Service

If you have a SaaS (Software as a Service) business platform, improving the features’ quality or increasing the number of features will require hiring more developers. The developers will charge extra costs for sure. Suppose you don’t increase the price here. In that case, keeping the profit margin stable will be more challenging after paying developers additional salaries and expenses for improving the service.

Here is an example from Netflix. They added new TV shows and movies that made them increase their monthly subscription fees.

Adding Features Causes Price Increase
5To Attract Better Quality of Clients

If you own a cost-effective business platform, your clients might treat you with unexpected expectations and blame you for their problems. On the other hand, if you make sure that your customers get what they pay for with higher prices, you will have a chance to be formal with a more professional approach. When you ensure the best services in the market at premium prices, you will be able to attract more customers who will value your offer and services. These types of consumers are often responsible for what they have to choose to purchase. It will improve your business reputation in the long run for sure.

6To Control the Numbers of the Customers

If you want to make 10 thousand dollars in one month, you can trade 20 products for 500$ to reach your goal. On the other hand, you can sell 200 products for 50$ to make 10,000$. Handling more customers is tiring; considering this, you can decide to lower your customer base, not hampering the profit margin. Increasing the prices and improving the standards might lose some low-cost customers but will let you get better quality clients. But, you can lower the number of customers only when it becomes harder for your team to handle everything.

Please look at the notice from Disney Plus, a giant business platform showing a way to unsubscribe if the customers feel unworthy. They can do this because they have better quality clients who are more interested in purchasing better services.

Letting Customers an option to unsubscribe if the new price is not worthy to them.

To Whom to Send the Notice of Increasing Prices?

A price increase announcement is necessary to send to the existing customers. Sending that notice to the person who is just a lead and not a paying customer might seem irrelevant to them. Imagine you discovered a shoe company and are thinking of buying an item. If you get a price increase notice from them before experiencing their product, what would you do? You will most probably leave it and switch to another brand.

Segmentation is essential when sending a price increase announcement via email. It will help you send personalized emails relevant to your customers. Let’s make it clear.

Let’s assume you have an online travel & tourism business. Some of your customers are employees from different organizations with weekends to visit for tours. Some are students with a low budget for touring. Among the rest, some prefer to take a tour with family members once or twice a year with a medium size budget. Others are foreign tourists with a higher budget and expenditure. How will you manage all of them? Will you maintain every one of them in the same way?

The answer is “NO.”

Those who came from a different continent won’t like to hear the same argument as the students with lower budgets for tours. You can offer the most premium service to a foreign tourist, which will not work for a student.

So, preparing price increase announcements for each segment would be the best way. Sending price increase letters to students might reduce the number of customers from this segment, but minimizing the low-cost customers will be a good idea. In that situation, you will need to offer more attractive and expensive offers to other segments with the same capability.

Get Help for Segmentation

The email marketing tool, MailBluster, can assist you in preparing segments for the best communication for your customers. After signing up with your business, you will find a feature that will let you segment your customers based on their online attributes.

Segment with MailBluster

An example of segmentation has shown above. A renowned organization containing themes and templates store ThemeWagon segments its customers just like that using the help of MailBluster.

How to Write a Price Increase Email?

Communicating with customers with a price increase email is quite challenging as no one is interested in your products’ prices they are increased or not. Instead, the support team of your business might face adverse reactions from some of your paying customers. Let’s say, if you don’t find any complaints from your customers, assume that you didn’t increase the prices enough yet. It’s up to you if you need to make profits or make customers happy by reducing the profit margin. But, as an intelligent business owner, you should decide to make up your customers’ minds to make the extra purchases in your business with a price increase letter. 

When choosing the right words and tone to communicate with existing customers, a price increase announcement is tricky as you try to make them cope with the new pricing policy. There are things to consider while writing a price increase email.

Send Announcements in Advance

Consider that your customers’ incomes are very limited, and they will have to manage other costs to continue purchasing in your company. They will need periods to adjust to the new situation by preparing in advance. Letting them know about the new price increase in advance can be a chance for them to make any adjustments they need while taking time.

It is an excellent idea to let them purchase a few more times with the current pricing policy before increasing the prices. It will encourage them to continue with your business after the pricing change.

Master Abrasives planned to increase their price in September 2022 and sent their notice in May 2022 in advance, keeping in mind that their customers need several months to adjust to the new pricing scheme.

Sending Price Increase Letter in Advance

Be Straight

Avoiding miscommunication is essential while preparing a price increase announcement. As wordy fat can lead to a misunderstanding and might defocus your recipient, removing them will bring a greater output. The best way is to be straight and to the point. Avoid presenting irrelevant information that doesn’t match the price increase notice.

Consider that your customers won’t read the notice if it seems like an essay. It might seem odd to your customers if you overly present an apology. On the other hand, discussing thoroughly your pricing policy might seem unnecessary as they don’t have an interest in your policy-making. It’s better to write key points of the updates you made in your services or products so they can easily understand the situation.

Being straight and to the point, SNF sent a notice to its existing customers to clarify the fact.

Being Straight in a Price Increase Letter

Justify Your Price Increase

What if you tell your regular customers that the price of their necessary goods will increase by 30% without justification! They will most probably switch to another business to save their extra penny. How can they value your more expensive products if you don’t show them that?

Describe in brief how well the new updates are going to be. You need to clarify that you increased the prices of new updates not because you just wanted to. Adding additional features or using more expensive raw materials make your products or services more costly and royal, which your customers must know through you.

Marriott Drywall Materials created an example of announcing the price increase with proper justification.

Justify the Price Increase

Write Personalized Letter

Suppose you make a typical letter for a large audience without segmentation. In that case, your words might seem robotic to most of your receivers. You must remember that you are a human, not a robot, communicating with another human. Better communication can’t be possible with a robotic text. On the other hand, a price increase letter brings disappointment to the existing customers. So, the primary focus should be to reduce dissatisfaction with convincing messages and offer additional and royal features in the new upgrades. What if you consider mentioning each person with their name? They will feel special as if you care about them that much, which might keep some of them in touch with you even after the price increase. Look at the example below. Netflix mentioned the name of the user while announcing the price increase.

Personalized Price Increase Notice Example

Appreciate Them for Being Your Customers

Your customers are the reason for the growth of your business. Let them know that. Tell your customers how special they are to you, and you have a solid reason to change your pricing policy.

The increasing price might cause some of your customers to stop purchasing in your business as all of them won’t be interested in paying extra money. But, your appreciation will make them feel special and compared to your competitors, they will have a chance to return to you.

An announcement from Urban Hair Design below shows how to appreciate the customers at the first statement.

Appreciating Customers in a Notice of Rising Price

Focus on the Value of the New Updates

There are ways to justify the price increase, but what your customers will get in new updates should be a primary concern here. You are not sending price increase notices to the experts. Instead, you are sending it to the actual customers who use your products or services. In other words, your recipients are regular users of your products. So, they need to know the value of your newly updated products’ pricing to consider if they are worth purchasing at a new declared price. 

Show them the value of your products, explaining briefly but not too shortly why they should purchase with extra money.

Here is an example from Venator. They focused on the value of their new updates while sending that notice.

Focusing the Value in a Price Increase Announcement

Give Them a Few Last Chances

Don’t impose a new pricing policy on customers without giving them a chance to purchase at the current price. Increasing the costs might discomfort them if you don’t inform from when the new pricing policy is going to work.

Let’s say you have a business of baby products, and the price for baby food items demand increases due to the rising costs of shipping and raw materials. Consider how much suffering it will be for the parents taking care of their babies who need immediate supplies but don’t have extra money for increased prices. You might fail them if you don’t think about their woes. Please give them a few chances to prepare for the next purchase with the current pricing policy. Offering a period with old pricing in your price increase letter is essential for these customers.

When to Send a Price Increase Letter?

Timing is essential when sending a price increase letter as people have other costs to maintain. As mentioned before, they must prepare themselves for the extra penny, and they need time for that. How much time you are going to give them depends on the type of your business.

If your customers purchase monthly to get your services, giving them an extra month with old pricing is an excellent way to maintain a good reputation. On the other hand, announcing a price increase within one week is suitable for a business like an online grocery shop as customers purchase almost daily for their everyday needs. One week is enough time for them because they can buy products from that grocery shop several times at current prices.

A notice from Spotify shows how they manage their monthly subscribers by announcing the price increase, giving them one last chance to purchase at the current price.

Giving Customers a Chance in announcing the rising price

Timing depends on the buyer’s persona. Assume that you created two segments. One purchases products twice or thrice Monthly. On the other hand, others buy regular items daily from your business. Will you write the same price increase notice for both segments!

No, you shouldn’t do that. It would be better to give your monthly buyers one month to influence them to buy more at current prices as they won’t get it in the long run. Experiencing more products might make them stay with you after the price increase if you give them the best offer.

Things to Consider While Announcing Price Increase

Changing a pricing policy is a sensitive issue for any type of business because they can get various kinds of reactions from customers. That can end in losing valuable customers as they can be disappointed with the new pricing. Nurturing existing customers and influencing them to stay should be a significant concern while writing a price increase email. There are things for you to consider while managing this sensitive situation in your business.

Be Authoritative

An overly apologetic tone or too much explanation might hamper your professional approach in your price increase letter. You must remember that the business is yours, and you don’t have to be remorseful with your notice. Instead, be authoritative with your price increase email with a brief explanation and proper reasoning.

An announcement from Burgess Pigment Co. is an excellent example of an authoritative price increase email. Their tone and visualization made it professional to look. Using the company logo and the signature of its’ sales and marketing, the manager ensures that this letter is authoritative.

Authoritative Tone in a Price Increase Letter
Don’t Increase the Prices More Than Once a Year

Making a loyal customer base takes effort and time. Indeed, you don’t want to lose them after putting a lot of effort into making them get in touch with you. Increasing prices frequently is dangerous for your business as it can lose their trust in you and your business. Please don’t raise prices more than once a year.

Let Your Whole Organization Know about the New Pricing

Let each employee in your industry know about the new pricing because the policy change will impact all of them, directly or indirectly. Suppose your sales and support team faces lackings of information. In that case, they have the probability of making a miscommunication while serving the customers. On the other hand, the marketing team needs to be updated as they will have to make the marketing strategy depending on your new pricing.

Get Feedback from your Customers

Giving your customers a chance to express their opinion publicly is a great marketing strategy. Consider that they regularly purchase your product and services from your business and must have something to say. Get feedback, and hear their complaints and appreciation so that others can judge you and your business depending on their words. The term Testimonial Advertising defines this process.

Shopify emphasizes collecting feedback this way.

Collecting Feedback
Link Them to FAQ

Since your customers probably have something to say or know directly from you, link them to your FAQ (Frequently Asked Questions) page so that they can keep in touch with your support team. Prepare your support team with accurate information to avoid any kind of miscommunication. You might fail to convince them with your price increase letter. Ensure that your support team can persuade your customers to keep purchasing at the increased price. 

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