How to tell your customers about a price increase

Small businesses are struggling to balance increases in their own costs with how much they can charge customers.

And as the cost of running a small business continues to soar, 62 per cent of small business owners told us they were planning to increase their prices in 2023, according to our SME Insights Report. 

Whether you’re a freelancer, tradesperson, or have your own shop, it’s important to get the price increase message right. 

If you’re only just starting your own business, it can be even more difficult to understand how and when to raise your prices. 

Just remember that it’s normal for businesses to put prices up, and bear these tips in mind so you communicate the message in a way that’s right for you and your business. Here are our tips on how best to tell customers you’re raising your costs – ideally by personalised letter or email. You can find a template later in this guide. 

How to tell customers about a price increase

If you have loyal customers who regularly buy the same product or use your service, then it can be difficult to know how to approach a price increase.

Imagine if your favourite subscription service went up by £2 a month without you knowing – it’s important to be proactive and tell customers about your planned changes as soon as possible. 

Giving them the time to plan and process the increase will help the message land better.

You should send a price increase letter to all of your customers, and personalise it where possible. 

You’ll need to think carefully about the tone of your letter and address your customers personally if you can. You can do this easily if you use a CRM system to email customers.

You could also display the information clearly in your shop or other premises. 

How to write a price increase letter 

Let them know well in advance 

It’s important to manage when you increase your prices and give customers plenty of notice. They may need to reassess their budget in response to you increasing costs, or even explore other options. 

If you’re able to introduce a gradual price increase over time then that can help bring customers along with you.

When customers are happy with your products or services,they’ll be more likely to respond well to a small jump in prices. Do it at the wrong time and you could risk losing customers, which is known as ‘customer churn.’

All businesses experience churn. However if your customer churn rate is high, you’ll be losing a lot of existing customers each month which could lead to financial problems.

Tell them why you’re doing it 

Whether it’s operating costs or the soaring price of materials, energy or fuel, give customers the real reason behind your price hikes. They will appreciate the transparency. 

This also gives you the opportunity to highlight your commitment to continued quality – you may be increasing costs to cover new hires, which will vastly improve efficiency and customer service, for example. 

Deliver the message clearly, empathetically, and in brand tone of voice

Explain clearly what’s changing  and don’t apologise. Call it a ‘price increase’ – customers won’t be fooled if you call it a ‘price update’ or ‘price adjustment’, they’ll just think you’re being inauthentic. 

Adam Cozens shared his approach to price increases at his specialty coffee shop, Perky Blenders: “When we put our prices up, our customer base were understanding. Small businesses shouldn’t be afraid to put their prices up in line with their own costs, but they have to do it at the right time.”

Show that you understand how your customers might be feeling when they hear about your price increase, and it’s not a decision you take lightly. Use your brand’s tone of voice to help you communicate this message.

Encourage them to ask questions 

Lastly, make sure you give your customers the chance to ask you any questions. Be open to feedback and let them know the best way to get in touch with you if they have any concerns. This can help avoid any negative Trustpilot reviews or comments on other review sites.

Send a follow up 

Emails can easily get lost in spam folders. To make sure the message gets through, you’ll want to send a follow up or two. Implementing a countdown will also give customers plenty of reminders of the upcoming change. 

And while no customer is excited about seeing prices rise, they may feel more appreciated if you offer them a perk or deal as part of a loyalty scheme at the beginning of the price change. 

As you begin to implement the price change, you should carefully monitor feedback and customer churn and adapt your strategy accordingly. 

Price increase letter template 

Dear [customer name], 

We’re writing to advise you that there will be an increase of [X amount or per cent] on [product or service]. This will come into effect on [X date]. 

This unavoidable increase is due to [X reason]. 

We have done everything in our power to minimise the increased cost to you while still maintaining the high quality [product or service] you’re used to. 

All orders made before [X date] will be honoured at the existing price, so please order soon if you would like to take advantage of this. Plus as a thank you for your loyalty, we will also [add in an offer or scheme]. 

Please don’t hesitate to reach out if you have any questions. You can also call us on [phone number]. 

Sincerely, 

[Sender’s name]

[Title]

Have you had to increase your prices? Share your tips and experience in the comments below.

Photograph: dusanpetkovic1/stock.adobe.com