Price Increase Justification
This conversation is never easy to have with customers. After all, who wants to hear that the merchandise your business relies on is going to cost more ?
No matter how well you communicate this change, your customer serve team should expect at least a few negative reactions. If you are n’t seeing anyone complain about higher prices, then they ‘re still probably excessively low. This leaves it up to your discretion whether you want to increase gross or maintain customer satisfaction .
If you ‘re experiencing pushback from your customer base, it ‘s helpful to sync your sales and customer military service teams. Both departments should align when it comes to how you communicate this price exchange. It will provide customers with reproducible information as they speak with both sales reps and service reps .
In general, the best approach your team can take is assuring customers that the increase will help maintain product quality. Customers who are subject on your products will be more sympathize of this reason and will want you to maintain the high quality that they ‘re accustomed to .
HubSpot ‘s Chief Executive Officer, Yamini Rangan, reflects on this approach in the quote below .
“ Some price optimizations were successful and others were n’t. But the ones that we communicated well were always value-driven. ” – Yamini Rangan, Chief Executive Officer at HubSpot
If you ‘re not surely how to begin the conversation, take a look at some of the best practices below before you get started .
Tips for Announcing a Price Increase to Your Customers
- Contact them directly.
- Let customers know well in advance.
- Remind them that higher prices mean better quality.
- Explain the reasoning behind the price increase.
- Ensure the entire organization is aware of the price increase before announcing it to customers.
- Allow customers to reach out with further questions or concerns.
1. Contact them directly.
Imagine if your Spotify Premium bill increased from $ 9.99 to $ 14.99 per month without your cognition or accept. You would be reasonably delirious, right ?
It ‘s unfair for a customer to abruptly find out there has been a price increase in their product. If a price increase occurs, go through your number of customers who use that merchandise or service, and send a price increase letter notifying them of the change. If potential, address the letters to each customer to personalize the process .
2. Let customers know well in advance.
You should provide your customers with enough of time to come to terms with the price increase. They may need to re-assess their budget or consider alternative options, so you should keep them in the closed circuit once you ‘re made aware of the situation. additionally, encourage them to make one or more product orders before the price addition kicks in .
3. Remind them that higher prices mean better quality.
The necessity for a price increase can be confusing for customers, specially if they ‘ve been purchasing the same product for months or years. It makes it vital that you stress the importance of product quality .
typically, products increase in price to match higher function costs, increases in hires, or increases in prices of needed materials. To ensure the lapp level of high quality, sometimes you have to raise the price .
4. Explain the reasoning behind the price increase.
To make it clear that you ‘re raising the prices to maintain the quality of the intersection, you should explain what caused the price increase. For case, as some natural materials become increasingly scarce and expensive, companies that utilize these materials are forced to increase the prices for products that use them. Laying that out to customers will prove your willingness to be transparent .
5. Ensure the entire organization is aware of the price increase before announcing it to customers.
It would be embarrassing for a frontline actor to by chance charge a customer the incorrect monetary value because their company failed to notify them of a change. even if all employees were made aware of the situation, they should all be on the lapp page in terms of the price difference, the reasoning, and the logistics moving forward. That room, your caller has a coherent voice on the matter .
6. Allow customers to reach out with further questions or concerns.
You want to be sure your customers receive all the information they require. A lack of information could cause them to churn to a rival with lower prices. Reassure them that they can constantly reach out to anyone in your company — including high-level executives — with any more questions or concerns that come up regarding the price increase .
Have a price increase coming but however not sure how to say it ? Check out the comply price increase letter templates to help you put it in the right words .
Featured Resource: Price Increase Letter Template
Price Increase Letter Templates
It ‘s significant to let your customers know about an approaching price increase, but telling them can sometimes be crafty to phrase .
If you ‘re lodge, take a look at the templates below for ideas on conveying the message to customers .
1. General Price Increase
Dear Customer ,
Please be advised that [ Company Name ] will generally increase prices up to [ Value ] on all [ intersection type ], effective [ Date ] .
[ Provide any necessary logistic details. ] As constantly, we are committed to providing quality products and services to you and appreciate your business and continue support .
[ name ] This is an example of a letter that lays out a general price increase to customers. It states the claim percentage of the price increase and which products will be experiencing the higher cost. The letter besides states precisely when the price increase will come into effect and reminds customers of how long they have to orderliness their products at the stream price .
2. Increase in Cost of Materials
Dear [ Customer Name ] ,
This is a notice that there will be an addition of [ Value ] in our [ Product Type ] price to take impression on [ Date ] .
Since [ Date or Circumstance ], [ Company Name ] has seen ever-increasing costs for [ Relevant Aspect of Business ] that has affected the cost of providing service to our customers .
The increase helps us ensure our committedness to providing the very best products and services to you .
If you have any questions about the above changes, reach [ Details ] .
We thank you for your support and continue commercial enterprise .
This letter besides states the accurate share of the monetary value increase and when it will go into effect. It gives a particular reason for the price addition, providing transparency that many customers will understand. To make this message more impactful, consider adding the value that the price increase provides to customers .
3. Increase in Operating Costs
Read more: Top 5 Benefits of Collaboration in Business
Dear [ Customer Name ] ,
After cautiously analyzing increased materials and overhead costs, we are writing to inform you of a necessary forthcoming price increase .
With the exception of [ Product Type ], [ Company Name ] will be increasing prices by [ Value ], effective [ Date ]. A fresh [ year ] price list will be issued on [ Date ] .
[ Insert breakdown of all products affected by the price increase. ] Please be assured that [ Company Name ] has made every campaign to keep this increase to a minimal and will continue to honor current price structures up to [ Date ] .
Like the others, this letter states the percentage of the price addition and when it will go into effect. The letter begins by stating a clearly rationality for the change. It ‘s helpful to lay out the demand products that will be experiencing a larger price increase than the stay to avoid any confusion from customers .
Based on these templates, you can use the format below to create your monetary value increase letter to send to your customers .
Sample Price Increase Letter Template
Keep in mind that you ‘ll want to adhere to the tone that you ‘ve set during the customer relationship therefore far, while being crystalline and personal every measure of the way. Templates can help provide the necessity professional context for monetary value increases and other challenging topics, but be sure to customize them for maximal impact .
Click here to download a free price addition letter template, available entirely in HubSpot ‘s 50 Customer Service Email Templates Kit .
How to Write a Price Increase Letter
Delivering notices of a monetary value increase shouldn ’ t bring a sense of apprehension. With the messaging tips below, you can make things easier for your team and customers .
1. Be clear and concise.
Customers shouldn ’ t have to guess or assume what your agreement means. Communicate the important information at the begin of the notice, letting them know explicitly what the new pricing will be and when it will take impression. Outline any steps customers need to take before the increase happens. adjacent, explain what their options are and where they can get more information .
2. Be empathetic.
Depending on your industry, the lyric you use for written agreement may need to be more formal, but it shouldn ’ triiodothyronine come across as cold. The Netflix letter above is a great exemplar of being both personable and professional. It makes customers feel that their business is valued and that the company sees them as more than just a count. Put yourself in your customer ’ second shoes and think about how you ’ d like to receive exchangeable newsworthiness while drafting the letter. additionally you ’ ll want to thank them for their business before signing off .
3. Don’t apologize.
Companies raise prices all the time and it ’ s a completely convention view of doing business. Apologizing will not only make the reviewer think you ’ rhenium diffident of the decision, but besides creates unnecessary awkwardness. Your product or avail provides excellent value and you should charge accordingly .
4. Send a follow up.
Email notices can easily end up in spam folders and customers can mistake physical letters as debris mail. To combat this, it ’ s good to send a follow up notice before the addition goes into impression. It will besides give a moment of cushion for customers who possibly read your first notice, but forgot to follow up or take military action to renew. additionally, it will decrease the chances they ’ ll feel blindsided by an increase .
With these templates in hired hand, let ’ s go through some best practices for making your price increase announcement .
Price Increase Letter Examples
You have the tips. You have the templates. How do they work in very life ? If you are a give member of any subscription service, chances are you have received one or two monetary value increase letters in your electronic mail inbox. Amazon Prime is a popular company you might have witnessed increasing prices over the last few years. They are not the only ones. Let ’ s take a search at examples from Spotify, Disney+, Upwork, Hulu, and Netflix .
Spotify sent an e-mail to its premium Family Plan members about an incoming monetary value increase. The Family Plan is a discount rate design for up to six family members who live together to enjoy Spotify Premium accounts. With the change scheduled to happen only four days after the e-mail was sent, one might believe that Spotify blindsided its loyal customers. Diving far into the e-mail, that would prove false. While we can not be certain that they notified their entire organization before the announcement, this monetary value increase electronic mail hit on the five tips listed above .
One, they contacted their premium Family Plan members directly through e-mail. Two, they let customers know well in advance. Although the change would be effective four days following the electronic mail, Spotify gave their subscribers an extra calendar month with the previous cost. It would give customers time to decide whether to cancel or keep their subscription .
Spotify combines tips three and four into the same statement : “ … we are increasing the price of Premium Family Plan so we can continue to bring you new content and features that you can enjoy… ” Their reasoning behind the monetary value increase is to provide customers with better quality .
And last, after the body of the e-mail, they prompt customers to follow up with any questions with their hold staff .
Short, gratifying, and to the point, this price increase e-mail is an ideal exemplar to imitate when you write your own letter .
Like Spotify, Disney+ announced a price increase to “ The Disney Bundle ” subscribers. This bunch includes subscriptions to Disney+, ESPN+, and Hulu. The e-mail informed customers of a price increase to $ 13.99 ( previously $ 12.99 ). Disney+ touched on many of the tips listed above, but they besides missed a few .
The streaming platform notified customers immediately via electronic mail. Disney+ besides gave three weeks to decide between keeping or canceling a subscription. This price increase letter closes out with a call-to-action for customers to visit their Help Center for questions. While customers had ample time to decide or reach out with further questions, this example fails to tell them why their subscriptions increased .
Remember, Disney+ launched in November 2019. Compared to Netflix and Hulu, which launched in 1997 and 2008, respectively, the platform is very modern. One could anticipate that customers were curious why their subscription monetary value was already increasing after a relatively short-change time. While an article from CNN Business explains the reasons behind the increase, Disney+ did not share these reasons with customers in their electronic mail announcement .
Upwork, one of the largest freelance websites, announced a price increase to its Freelancer Plus plan members. This pay plan is a increase from its detached Freelancer Basic design. It allows freelancers the lend benefits of keeping their earnings confidential, customizing their visibility URL, keeping their profile active during breaks, and more .
While this price increase letter is significantly longer than the previous examples, it is still concise for the charge of change explained. That is not the only thing this letter does well. After this e-mail, the Freelancer Plus design members had a calendar month to sit with this information. To explain the reasoning behind the price increase, Upwork includes a section titled, “ Why are we making this change ? ” One can assume that this price will greatly benefit Upwork, but the electronic mail focuses on the benefits to the freelancers .
At the close, this electronic mail does not prompt freelancers to reach out with further questions, but it does direct them to learn more about the changes happening to their membership. With Upwork being a platform where freelancers spend and make money, this price increase letter covers enough touchpoints to efficiently introduce customers to the deepen .
Netflix took a much more effective approach in their price increase messaging. Like Hulu, they sent notice good in progress but besides took the opportunity to remind customers how their service adds measure .
“ This update will allow us to deliver even more measure for your membership — with stories that lift you up, move you, or simply make your day a little better. ” It perfectly sums up why customers should stick around despite the increase .
overall, Netflix ’ randomness tone is warm and personable while inactive hitting all of the best practices listed above. To further retain customers, the caller added a list of newly releases and top picks in the pedestrian to retain patriotic customers — showing them all the big capacity they ’ ll miss out on if they were to cancel their subscription .
Incoming: Price Increase Notice
If you have made it this army for the liberation of rwanda, you probably have a price increase notice on the horizon. Don ’ thymine procrastinate. Your customers have signed up for a product or service, and they deserve ample time to make a decision. Most customers anticipate increased costs in the future. Follow the tips listed in this article, and keep moving ahead .
Editor ‘s eminence : This post was in the first place published in March 2019 and has been updated for breadth.