How to handle talking your customers through a price increase

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March 23, 2021
5 minute read

Increasing your rates is a double-edged sword. On one hand, you’ve gained the confidence and ability to be worth higher rates, and you’ll increase your earning potential. But on the other, you have to face the uncomfortable reality of having that conversation with your customers.

It’s hard enough to price your services in the first place, and it can be intimidating to think about what your customers will say when you raise your rates. However, with a bit of tact and persuasion, you can professionally explain price increases to your customers without harming the relationship or losing a sale.

Evaluate your relationship

Before you contact your customers about anything related to your price increase, you’ll want to take stock of your relationships. Do you have close relationships with your customers, or are you “faceless” to most of your customers? Or, maybe you’re somewhere in between.

Regardless of the nature of the relationship, you’ll want to use this as a cue for how to approach your rate increase announcement. If you have lots of one-on-one interactions and touchpoints with your customers, a more personal approach may be appropriate. But if you have a large database of thousands of customers with whom you communicate via email, a simple announcement email may be the best way to go.

What to say and how to say it

When you announce a price increase to your customers, you need to cover:

  • What’s happening. It’s important to be upfront when you plan to increase your prices. When you tell customers, include specifics—let them know exactly how much they’ll be paying when you implement the increase.
  • Why it’s happening. This is arguably the most important piece of your announcement. The stronger your justification for the price increase, the more likely customers will be open to it. Some valid reasons for increasing your rates may include extra training or certifications, upgrades to your physical space, or add-ons to your services.
  • When it’s happening. Give your customers a bit of notice—you don’t want to spring the change on them the day before. Just like you plan for your business, your customers plan for their lives. Let them know when the price increase goes into effect and when customers can expect to see it on their invoices.

Overall, it’s best to be direct and address the price increase head-on. You don’t want to be misleading when representing your new pricing strategy.

It’s also a good idea to spend extra time rationalizing the price increase. There are likely many reasons you deserve to charge more for your work—continuing education and training, you provide more value to your customers over time, the market is pushing prices up, etc. While you want to be transparent, you also want to focus on it from the customer’s perspective. You’re essentially telling them why you deserve this increase, and why it makes sense for them too.

In some cases, we increase our rates because we don’t want to work with a customer anymore. If this is the scenario for you, you can spend less time justifying the increase.

Price increase announcement template

If you’re having trouble writing your price increase announcement, you can use this template as a starting point. Customize it to suit your prices, products/services, and channel.

[Greeting to your customer],

[Personalized sentence about your work and recent wins, and a quick update about your business.] As such, our/my rates are increasing. The new rates break down as follows:

[1–2 sentences to justify and explain the price increase.]

Let me know if you have any questions at all! Thanks so much.


[Your name]

What happens when your customers say “no”

In a perfect world, all of your customers would respond in agreement about your price increases. But the reality is, your price increases may ultimately cause some customers to leave.

Instead of looking at this as a total loss, consider it a way of culling your customer base so you can spend more time focusing on customers who generate a higher return on investment (R.O.I.) and lifetime value (L.T.V.).

Another tip: Anticipate questions before you announce your price increases. You’ll want to think about what customers will ask so you can prepare yourself with a tactful and professional answer. You might also document questions as they come in, noting common inquiries and coming up with canned responses for each.

If you’re open to negotiating, determine your bottom number first. This will give you a point to negotiate.

When you can’t find a middle ground, you might consider referring them to other small businesses. An established freelance graphic designer may refer their lower-paying clients to a designer early in their career or business, for example.

Moving forward with your price increase

Raising your rates is critical to business growth. This raises your ceiling for earning. You can also make a regular schedule for price increases to ensure you’re always moving up. For example, you might raise your rates every calendar year—hold yourself to this schedule to keep increasing your earnings and get more from your business.