Business Tips, Customer Success | 7 MIN READ

4 Ways to Announce Price Increase to Customers without Losing Them

Announcing price increase to customers might be a daunting task for companies. But with the right strategies in place, you can even win their loyalty.

Shoeb Ahmed
Shoeb Ahmed
Jan 28, 2021


Announcing price increase to customers

Increasing price periodically is inevitable for any growing business. There are multiple factors that account for price increase like rising production cost, staff salary hike, revenue growth, or upgrading the product. While it is a necessary step to keep your business running, it surely is not pleasant for your customers. Hence, announcing price increase to customers must be done carefully so you don’t lose them. If you do it strategically, you would attain your goal without any harm.

Ever imagined what makes Apple’s customers keep spending more on their new products? It is the trust they have established in their customer base. But more than that, there’s an interesting consumer psychology involved with price increase. Most customers tend to associate high price with high quality. And Apple has been leveraging this psychology for decades to generate higher returns from its consumers.

So, if you are scared to increase your price, know that with a right strategy in place you can actually turn the table. It is not only possible to prevent customer churn but, in fact, you can boost their loyalty despite a price hike. Sounds unreal? It won’t be by the end of this blog.

How to announce a price increase to clients

Before you convey this message to customers, you must understand the Gain Principle that holds true for every customer.

Gain = Value – Cost

What customer finally gains from your product is the overall value minus the cost involved. Hence, the logic becomes simple. If you want to win your customer, show and prove them more gain. This is possible by demonstrating value much higher than the increased cost. If your price increase is x, your value increase should be 2x, 3x, or 5x.

How to show them more value from your product is case specific and for you to think and work around. Below mentioned are the four ways of price increase announcement to customers.

#1 Be transparent and upfront

Before you reach out to customer, be aware of the looming fear within you in conveying this message. If it is within you, your customer would easily sense it and behave unfavorably. Hence, be so confident in sharing about the price increase that the customer gets curious to know the rationale behind it.

If you are sending an email, instead of redirecting them to your pricing page, show them an image of new price in the email itself. This shows that you are not hiding the information but sharing it unapologetically.

Even though a feeling of discomfort would arise in customer’s mind, you have to reverse their perception. And the first step in doing so is by not empathizing with their pain because it will only make it more real. Only when you believe and express that it is not a pain for them, would they be open to know how instead of dwelling in their negative emotions.

#2 Give them enough time

Don’t increase the price overnight. Your customers should get enough time to come to terms with this update. Also, there might be other obligations they have to consider like readjusting annual budget, communicating and getting approvals from their superiors, etc.

An even more useful step would be recommending them for more purchase or buying an annual subscription plan on current price before the price hike becomes effective.

Be aware that it is inevitable for them to at least think once for your alternative. You cannot control it and neither should you try. It is also true that they won’t leave you without having a word. And the switching cost is another barricade for them. So, let all their reactive emotions subside before you approach them for further discussion.

#3 Demonstrate value

Value can be perceived in many different ways. Also, there can be different reasons accounting for price increase. You might need more funds to do the necessary research and development on continuous upgrade of your product. Alternatively, the cost of goods sold can also be rising due to the rise in the cost of various resources needed for production. In this scenario, the value obtained is nothing but the consistency in the quality of product over time.

While announcing price increase to customers, convey them that you are upgrading the quality of the product or at least committed to maintain the same quality in future. The former case is easily acceptable. Whereas in the latter scenario, you demonstrate value by not only showing your commitment towards quality assurance but also reinforcing the fact to their conscious brain that your product is already of a superior quality.

If it is a product upgrade scenario, make sure you demonstrate them in numbers what value this upgraded product would bring. It could be in terms of more revenue, more savings, reduced cost, reduced time and effort, etc.

#4 Keep everyone on the same page

Make sure that the information reaches everyone on both the sides – vendor and customer. All the stakeholders in customer organization that a CSM is in touch with should know about this update. By communicating to each of them, you open a channel for anyone who is willing to discuss further. Through this, you can take control and veer their emotions in a positive direction. Otherwise, if they get to know this from one of their own, the negative sentiments would grow further.

And on the other side, everyone in your own organization should also be aware of this price change. It would be an embarrassment if one of your employees charges an outdated price to your customer.

Examples of how to announce a price increase to clients

Although it is always better to inform this to your enterprise customers over phone or in-person, it is not possible to do so for a large set of customers. Hence, you need to draft an email for communicating to your mass audience. Let’s look at a few examples of them.

Below is a price increase announcement letter sample used for converting free users to paid ones.

Price increase announcement letter sample for free users

Below example showing the reason as a rise in production cost in the letter to customer announcing price increase

Source: CrazyEgg

Shown below is a price increase announcement sample of upfront message by Netflix

price increase announcement letter sample
Source: Prisync

Wrapping Up

Price hike is an inevitable part of business journey, both for customers and vendors. Announcing price increase to customers is an art that you need to learn one day or another. It is the time when all the customer success strategies come to test. If you have been working constantly towards helping your clients succeed, and have strengthened your relationship with them, your price hike would be seen as nothing more than a minor glitch.

Think of something different in making them realize more value from your product, especially for this occasion. By focusing more on value than cost, you would help them perceive more gain which is the ultimate way to boost their loyalty.

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Shoeb Ahmed

Shoeb Ahmed

Shoeb lives and breathes Customer Success and SaaS. He has a passion to research on the latest innovations happening in SaaS and Customer Success. Shoeb hails from a Software Architecture background where he worked for many years with Indian Tech Giants like Wipro and ITC building software solutions for their MNC clients in the UK and Denmark. You can connect with him on LinkedIn here.

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