Offer more, honestly · Every business
The Price Increase Announcement to Send Your Customers
A good price increase letter tells customers the new price, the date it starts and the honest reason in a few calm sentences, and it reaches them weeks before they see it on an invoice.
A price increase letter to customers should say what is changing, by how much, when it starts and why, in one short message sent at least 30 days before the new price applies. Thank customers once, give them one way to ask questions and offer anything you can honor at the old price, such as appointments already booked, then send a short reminder a week before the date.
The template to copy
Email (send 30 or more days ahead)
| Part | Text to copy and adapt |
|---|---|
| Subject line | A note about our prices starting [date] |
| Opening | Thank you for choosing [business name]. I'm writing so you hear about this from us first. |
| The change | Starting [date], our [service or services] will change from [old price] to [new price]. [Or: our prices will rise by about [X]%.] |
| The reason | Our costs for [the two or three things that actually rose, such as product, materials, insurance or wages] have gone up, and this change lets us keep [the thing customers value, such as the same team, the same products or the same response times]. |
| What stays the same | Anything you've already booked before [date] stays at the current price. |
| One way to ask | If you have questions, reply to this email or call us at [number]. |
| Close | Thank you for being with us. [Business name] |
Text message (send one week before the date)
"Hi [first name], a quick reminder from [business name]: our new prices start [date]. Your next visit on [day] is already booked at your current price. Thank you."
At the counter or the chair
"Before you go, I wanted you to hear it from me: starting [date], this service will be [new price]. Our costs have gone up, and I'd rather tell you now than surprise you at checkout."
The checklist before you send it
- Calculate the new prices and the break-even share of customers you could lose (see the related break-even article).
- Set the start date at least 30 days out, and decide what you will honor at the old price.
- Name the real costs that rose, in plain words, and leave out apologies and long explanations.
- Brief everyone who answers the phone or stands at the front desk, with the same one-sentence reason.
- Update the website, the booking system and printed menus on the start date, not before.
- Send the email, then the text reminder a week before the date.
- Track visits, jobs and rebooking for 60 days after, beside the 60 days before.
Why it works
Customers accept a price increase they understand, and they fill in a less generous reason when nobody gives them one. In household surveys published in the American Economic Review, 79% of respondents judged it acceptable for a business to pass a higher cost on to customers, while 82% judged it unfair for a store to raise a price simply because demand had spiked; a later study in the Journal of Consumer Research found that consumers tend to overlook a business's costs and assume price differences go to profit. Experiments in the Journal of the Academy of Marketing Science add that a cost-based reason helps most with customers who are already satisfied, which is why the letter goes out with good service around it rather than in place of it.
Sources
- Kahneman, D., Knetsch, J. L. and Thaler, R. Fairness as a Constraint on Profit Seeking: Entitlements in the Market. American Economic Review 76(4), 1986. 101 and 107 respondents for the two questions cited.
- Bolton, L. E., Warlop, L. and Alba, J. W. Consumer Perceptions of Price (Un)Fairness. Journal of Consumer Research 29(4), 2003.
- Homburg, C., Hoyer, W. D. and Koschate, N. Customers' Reactions to Price Increases: Do Customer Satisfaction and Perceived Motive Fairness Matter? Journal of the Academy of Marketing Science 33(1), 2005.
Related reading: How to Raise Prices Without Losing Customers, Based on the Research · How Many Customers You Could Lose and Still Earn More After a Price Increase · How and When Salons Should Raise Their Prices
Email hello@osnovaops.com about your price increase
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