There comes a time for some business when costs start overwhelming profits. Many reasons can affect profit margins: the economy changing, price of raw materials skyrocketing, employee wages increasing, etc. To continue operations, some businesses are forced to increase their prices. This is a necessary step that can help a business stay afloat and keep making profits in a constantly expanding market. But how to tell customers about price increase when they are used to lower prices?
Several techniques help businesses transition from a lower to a higher price range.
- Announce changes via social media;
- Announce changes via phone;
- Establish a marketing campaign to introduce the new prices;
- Launch an email campaign
These techniques have the same goal: reach out to consumers and inform them about the current situation within your company.
What is a Price Increase Letter?
As the name suggests, a price increase letter is a way to inform existing customers about a change in pricing. This change becomes necessary when costs of production increase so much as to threaten profits. According to a recent study, only half of small businesses survive their first five years. If you want to make it into the other half, you may have to increase prices one day. Below, we’ve included general tips on how to inform customers regarding changes and how to increase brand trust. We’ve also reviewed a few samples of good and bad price increase letters and shared a few tactics on improving the seller/customer relationship.
Let’s get started!
• Don’t lie to customers
The first thing that any business should understand is that lying, especially to their customers, is a quick way of losing their customers’ trust. A business lives and dies on its reputation. Many businesses try to conceal information regarding products or services from their clients. No matter the reasons behind misinforming customers, the truth always comes out. Today, when our smartphones keep us connected 24/7, with regular access to social networks and authentic user feedback, the consumer has extraordinary power.
• Explain reasons and processes
Every company decision that directly affects the business needs to go through several meetings before it is approved and implemented. Use these arguments in your price increase letter to customers while trying to explain the reasoning behind the increase. Only reveal information regarding the current increase, don’t try to share more than you are allowed to share. Oversharing of sensitive company data usually results in a security breach.
Even if your announcement isn’t so exciting to announce, try to make it sound positive. Announcing that you need to increase prices to improve quality sounds better than saying that you simply want more money. Customers respond to brand maintenance. Most customers stay loyal to a brand for years; seeing you expand and improve your services will be positive news that will result in increasing your business revenue, not losing clients.
• Keep it to the point
Avoid landing in the essay pitfall – you aren’t in school anymore. Keep your email to the point and short – under 100 words is best. If you go over 100, it becomes easier for you to ramble on about unimportant subjects and make mistakes.
There are situations where a long email is required, such as promoting of a new product or re-branding. Price increase emails are not something you want to stretch to infinity.
• Demonstrate quality
We already mentioned that you shouldn’t ramble on in your price increase emails. Now let’s see what you should add to sound professional and knowledgeable.
- Explain how your current situation needs to change to preserve quality;
- Share your company values;
- Promise to keep the customer informed of future changes;
- Prioritize customer care, over profits;
Making sure that your price increase letter includes these bullet points (or only some of them that apply to your situation) will make you sound both professional and genuine. As a result, your price increase letter will demonstrate that your business looks for quality over profit. It’s a very difficult balance to achieve, one that many companies fail to even come close to.
• Human emails, not for robots
Many companies format their emails as if they were processed and read by Hal 9000 from Space Odyssey, emotionless and cold. This is one of the biggest problems of customer service and email marketing – talking to your clients as if they are machines.
Customers want to be valued. They want to be treated like human beings capable of rational thoughts. The old cliché rings true – ‘build a relationship’ with your clients. It’s an old, overdone saying that is still completely relevant and will unlikely lose its relevance any time soon. Today, fewer and fewer companies send no-reply emails from an impersonal corporate address — and for a good reason. For starters, an email that comes from company managers or representatives using their real names, already looks personalized. Plus, customers who regularly get work emails from companies can often recall the senders’ names, which helps build trust. Clients who have established a personal connection with the employees know that when the next email rolls out, whatever it is about, that it will be written by Jean, or George, or Steve. Connecting with your customers on such personal level creates many advantages.
- Brand recognition boost;
- Customer service improvement;
- Positive online reviews;
- Positive word of mouth advertisement;
- Trust.
Perhaps the most important part of writing a persuasive price increase letter is the ability to build trust with your clients. Trust is something that you cannot buy, no matter how much money you pour down the drain, and is something that is lost as easily as snapping your fingers.
Examples of good price increase letters
We’ve discussed what price increase letters can do and how they influence your customers. Now, let’s look at a few examples of price increase letters that follow the basic steps and deliver good and concise information without alienating the end-user.
Example 1
Hello [Name of Contact],
We are proud to announce new changes coming to [Name of Company]. Our focus is always on the customer experience, and we strive to bring you the best service that we possibly can.
For this reason, we would like to announce a price change to our product line [Product Name]. This change is necessary for a rapidly expanding market. While we would like to keep the old price the same and continue to provide excellent customer service, it isn’t possible. We would like to make the leap now and increase the price rather than sacrifice our quality and integrity.
[Name of Company] always strives to bring quality and dignity to you, our customers. We hope that this change doesn’t affect your trust in us and that you continue supporting us as we modernize and stay ahead of the curb.
Sincerely,
[Name]
[Title]
[Signature]
[Company Email]
[Social Links]
This example is great since it tries to establish an emotional connection with the customer. The goals of the company are clearly stated, and a roadmap for the product line has been established. By emphasizing the value of quality, you make sure that the client experience isn’t jeopardized and makes them feel as if this price increase will directly benefit them.
Example 2
Dear customers,
As head of [Name of Company] I would like to thank you for your continued trust in our company. We owe all our success to the millions of people who choose to bring our products into their lives and make us a part of your family. We wouldn’t be able to exist without you.
[Name of Company] has tried to keep consumer costs to a minimum for many years. We believe that what we do can be done to the best of our abilities without bleeding the end-consumer dry. Unfortunately, with the state of the economy as it is today, we can no longer guarantee the quality of our products. For this reason, we’ve decided to increase the price of [Product Name]. The increase is planned to take effect on [Date] and will affect [Product Name], as well as [Product Name]. The increase is planned to be [percentage increase].
We want to assure you that we implement this price increase with the consumer in mind. We have always strived to bring you quality at a reasonable price, but what good is a product that is cheap but of low quality?
If you have any questions, please feel free to contact our Customer Care center at [Social Links]. We will do our best to answer any questions that you may have.
Yours Sincerely,
[Name]
[Title]
[Name of Company]
This example is phenomenal because not only does it explain the reasons behind the price increase but also puts the client in the center of the company’s success. Unfortunately, many large companies forget that they even exist because hundreds of people buy their products daily, thus making them a lot of money. Forgetting the value of your customers is a surefire way of ruing an otherwise perfect business.
Example 3
Hey [Contact Name],
As a company invested in the best user experience, we are happy to introduce a more advanced version of [Product Name]. The new version will support [top features that were improved].
Of course, keeping up with all of these amazing features also calls for more staff, so I have to announce a 10% increase in the pricing. The new cost comes into effect on [date]. The updated price will help our team keep improving the product even further.
If you would like to upgrade to a new version at the old price, we offer our loyal customers a chance to renew the subscription till [date]. This way, you get to enjoy all the new features at the old price. It’s a limited-time offer, so click here.
Regards,
[Name]
[Title]
[Name of Company]
This is one of the best examples on this list because it emphasizes the value for the recipient and offers a chance to renew the subscription for an old price — even if just once. It also shows that the company values its loyal users, which helps build trust and nurture relationships.
Final Word
It doesn’t matter if a price increase will be 10% or 99% as long as the message that accompanies it is truthful and customer-oriented. Speak from the heart, not your wallet. This will not only boost your brands’ social recognition but will also generate positive buzz, even despite a price increase.
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