This past year, like too many other millennials, I bought a house. And very unfortunately, this house is in need of a lot of TLC. If you haven’t been paying attention, let me break the news: materials are very expensive these days. Headlines screaming about lumber and glass prices and delays in the supply chain mean that I’ve been on the receiving end of plenty of price increase letters.

And to be honest, I don’t mind. We all have to make a living and sometimes, that means price hikes.

So how do you increase prices without losing customers? It's all in the delivery. Which is why I'm going to share with you how to write a perfect price increase letter (or email or announcement). I'm going to cover:

• Common justifications for a price increase.
• Best practices for communicating a price increase to your customers.
• Price increase letter examples and tips to help you write your own.

Common reasons to increase your prices

Let’s say you’re considering a price increase, but you’re not quite sure how to justify it. Your customers, employees, and prospects need to know why costs are going up, when they can expect the change, and any product changes that will accompany it.

Here are three common reasons you might need to increase prices.

1. You need to meet rising costs

Just like we all experience cost-of-living increases, the cost of your supplies and workforce will naturally rise over time. God bless inflation?

Make sure you can maintain a healthy ROI over time, after your price increase. While there are plenty more business considerations and market research that go into calculating your price increase, it’s always good to anticipate the rising costs of each item that goes into your product offering.

Is your company growing? Is the cost of materials or software you use going up? Are you competitors charging significantly more than you?

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2. You've pivoted or repositioned

Businesses evolve over time. Some start as the cheapest option around, but as they get a better sense of their ideal audience and market conditions, they may pivot to serve higher-end customers.

Or perhaps your business is booming and your team can’t handle all the orders, subscriptions, packages, etc. That’s a sign it may be time to increase your prices. This can naturally narrow down your customer base while maintaining the same revenue stream. Even better? You can ditch those nagging clients that you just cannot stand anymore.

Simultaneously, you’ll rebrand yourself as a premium company. Think: high-quality, high-invest, high-reward. The Lamborghini of your industry. Who wouldn’t want that?!

3. You are (or want to start) selling to retailers

While I can relate to those who have gotten into the habit of buying *everything* from Amazon, or Grubhub, or Etsy, the reality is that suppliers pay the price of convenience.

These retailers take commission from businesses, the price of doing business. And that is understandable for the efficiency factor. If your customers use these retailers, they will understand that you need to increase prices on those platforms. Explain this concept in clear terms, with plenty of heads up, in your price increase letter.

Price increase letter examples and best practices

No one wants to inform their customers of a price increase, but if you go about it the right way, you can minimize the risk of churn and/or angry responses. Here are nine tips along with examples to help you get it right.

1. Communicate the change to your team first

Make sure that all of your teams know about this adjustment. Increasing your cost will impact every team in the business, whether directly or indirectly. While your customer service team needs to know how to answer questions, your marketing and sales teams will need to understand how to explain the new pricing and sell it to new customers.

2. Reach out to customers directly…

This barely needs an explanation. If you’ve been blindsided by rising costs of memberships (Boston Sports Club, I’m looking at you), you know that it’s not cool. Practice the Golden Rule here. And make it crystal clear—in both the subject line and the first few sentences of the letter/email. 

3…Multiple times

While you should prioritize the method of communication they're used to, you may also want to notify them via direct mail or even phone—depending on your relationship with your customers. I recommend using the same branded template that you use for any other company announcement, like a product update, fundraising announcement, event invitation, or discounted offer. It’s familiar and won’t run the risk of getting caught in spam traps. And if sending via email, follow these email copywriting tips like staying on-brand.

4. Give plenty of notice

The best practice here should be about two months from the price increase, particularly if it is a subscription charge. This allows your customers to cancel without violating any of your policies, or adjust their budgets accordingly.

If you can, add the exact dates that your price will increase for each customer. Using a bit of SQL, you can usually insert their subscription origin date and insert the date of the hike.

5. Segment and personalize

This is a given for all email marketing, but for a slightly different reason. If the price increase will have different implications for different customers, don't send a blanket email where your customers have to dig through and figure out what applies to them. Segment your customers by plan or service so you can personalize the messaging and make the important details crystal clear.

You may also want to segment by how long the customer has been with you so you can provide something special in the name of customer loyalty (e.g., extending your current price for another month or giving temporary free access to an upgraded feature).

6. Be informative but brief

This is one of our top email copywriting tips, and it's crucial for price increase announcements. Convey the exact increase, why you're increasing it, when it will take effect, and if there is any action needed on their part. But don’t get into the nitty-gritty details of the increase. Customers just want to know the facts. Plus, too much explanation starts to sound defensive and apologetic. Be confident and concise with your writing (learn how to do that here!).

7. But not too brief

 While Netflix certainly sends very brief emails about price increases, I wouldn’t recommend going with this type of in-app notification:

While yes, it is Netflix, so we understand that they are participating in streaming wars, it’s not an excuse to be this…succinct. It feels a little arrogant to tell your subscribers, “Hey. Your fee is increasing because we’re the best in the biz. Don’t like it? We don’t care. Cancel your subscription. Bye.”

Like I said, don’t do that.

8. Link to a FAQ page

Your price increase email will provide the immediate information your customers are seeking: how much, when, and why. But for some businesses, it's not that black and white. You may want to create a FAQ page to address hypotheticals, answer follow-up questions you anticipate, and provide any helpful context.

This can prevent an influx of calls and emails, and also demonstrates that you've thought this through and know your customers well.  For example, Adobe created this FAQ page that explains the price hike in historical terms and highlights new features.

Here’s another FAQ example:

9. Provide a clear way to get support

Even with a FAQ page, there are still some customers that will just want to talk to a human—whether that's to get some reassurance, try to bargain with you, or just complain. Make sure you provide a clear way for them to reach out, and that your support team is prepared. 

10. Don't raise prices more than once a year

Before you announce your price increase in a letter to customers, ensure that the team is absolutely certain the price will stay the same for as long as possible (ideally, at least a year)—even if this means bumping your increase up a bit to have a cushion. Better to be the bearer of bad news only once. Plus, small increases close together can appear sneaky.  

This also makes things less confusing if you have a subscription cycle. As mentioned above, there are plenty of business calculations that go into the exact adjustment, and this is a vital part of them.

How to write a price increase letter to customers [recap] 

While no one likes to send or receive a price increase letter, use these tips to make the experience as positive as possible for your customers and keep them loyal.

1. Notify all team members first. 
2. Reach out directly to customers.
3. Give plenty of notice.
4. Segment and personalize your emails.
5. Be informative but brief (but not rude).
6. Provide a FAQ page.
7. Provide a clear way to get support
8. Limit price increases to one or less per year

We’re always looking for good examples of good (or ugly) price increase letters! Send them our way for inclusion in this post.