How to Communicate a Price Increase to Your Customers?

Keeping prices competitive is essential for any business. Having this information can make the difference between having a successful business and one that is abandoned.

The price of a product or service can be a challenging thing to set because several factors need to be taken into account, including costs, the market, competitors’ prices and how much profit you want to make. But you also have to think about the customers because they have grown to expect a certain level of quality and they are willing to pay a fair price. So it’s important to always keep in mind that your customers are the most important aspect of your business. Eventually, you’re going to have to change your pricing strategy. But how do you do it in a way that keeps your customers happy?

You’re probably thinking: “This is a very easy task. Just add a note to the price tags and let your customers know.” Well, it’s not that easy.  

• You need to think about your customers. 
• You need to think about how your customers will feel if you tell them about a price increase.
• You need to think about how to make your customers feel that they are still getting a good deal. 
• You need to think about how to make your customers stick to your business.

The following blog will help you to understand how a business can raise its prices without incurring the wrath of its customers.

Why do prices go up?

One of the most important questions: why do prices go up?

The answer is simple: increase in price is a natural consequence of inflation. When inflation increases, the purchasing power of a dollar decreases, which means that a $5 gallon of milk from last year will be more expensive than a $5 gallon of milk today.

As inflation rises, the price of everything will rise, including the price of a product or service. Of course, prices can increase for other reasons. In some cases, a competitor in the industry can increase the price of a good or service, or a company can choose to increase prices to improve the quality or customer experience. Some price increases may be the result of a change in quality or an increase in raw material costs or labor cost increases, and so on.

How to let the customers know?

Letting your customers know about a price increase can be a tricky thing to do. It’s a fine line between informing your customers of an upcoming price increase and angering them enough that they take their business elsewhere. How can you tell your customers about a price increase?

There are ways to inform your customers about the changes without making them feel like you’re just taking advantage of them.

Several factors contribute to this. Also, you should be prepared to explain to your customers why you are raising the price of your product. So, what do you say? How do you handle the situation? Should you raise your prices when business is booming? Should you raise prices to cover expenses when business is slow?

Well, you should keep your competitive edge! Let us show you how to communicate with your customers on the increase of pricing.

Ensure direct communication with the customers:

Notifying your customers of changes well in advance is the first step to not losing them. This gives them enough time to make adjustments to their purchase plans. Moreover, it gives them the time to find alternatives if they are not happy with the new prices. Businesses should strike a balance between informing the customer of price changes and not hurting their feelings. To convey the information in a sensitive manner that doesn’t sound like a money-grabbing pitch, it needs to be done carefully.

Being upfront about the price increase would be ideal:

You can’t avoid it: at some point, you’ll need to tell your customers that the price of your product has increased. Not only will this lead to a negative impact on your sales, but it could also lead to a negative impact on your reputation. This is why you need to prepare your price-hike announcement carefully.

Be transparent about the price increase. Don’t just throw up a notice on your site and hope that your customers figure it out. Be clear about the price increase and why you’re raising your prices.

It’s always a good idea to give your customers plenty of time to come to terms with price increases. After you’ve made your decision, inform them of the change in price and ask what they may be able to do to keep getting the same products on a cheaper budget. Consider alternatives that are just as beneficial to them without hurting their pockets too much or encourage them to make any leftover orders before the price increase.

Remind customers that for quality products, they need to pay a “better” price.

The necessity for a price increase can be less confusing for customers if they are told of the importance of product quality, generally. When a company increases prices, there may be reasons such as new hires or the price of certain materials going up – either way it will benefit their business because it shows that their team is growing. It is important that you stress the importance of customer service so as to make sure your customers still feel valued and give them adequate reasoning behind why the price has been raised.

We have increased the price of our services, here are four benefits that you should expect

Explain the reasoning behind the price increase:

If a company raises its prices to cover the cost of maintaining quality, the company should explain why it is doing so. For example, some raw materials that go into products become increasingly scarce and expensive to obtain, putting pressure on companies that use those materials. Companies can benefit from laying out these reasons to customers in order to show their transparency.

Let customers know that you are there for them :

One of the most important things to do when dealing with your customers is to manage their expectations. You can reduce churn by making sure they always have access to the answers they need, which includes the reasons why certain costs need to be incurred. This doesn’t just apply to a price increase! It’s well worth reminding them that they can always reach out to anyone in your company with any questions or issues they might have even if it isn’t directly related to the higher prices. The best thing you can do as a leader is encourage a culture of openness within your organization so that everyone is able to communicate effectively and meaningfully, whether through technology or face-to-face.

What to Include in your price increase announcement?

In order to make sure that your customers are happy and understand why the price increase is happening, you should include the following in your announcement.

• Explain why a Price Increase is Necessary: It’s important to let customers know that you’re doing everything you can to keep prices as low as possible. You don’t want them to feel like you’re just trying to rip them off.
• Explain What the Price Increase Will Affect: If you’re going to be increasing the price of all your services, let customers know that now.
• Explain Why the Price Increase is Necessary : If you’re raising prices to improve the product or add a new service, make sure to explain why!
• Explain the Benefits of the Price Increase:  If you’re offering something new, let customers know what they’ll be getting in return.

So, you have a few options for how to handle this. 

• You can wait and not tell anyone
• Send a short, vague email to customers
• Send a detailed email with lots of information
• Send an email that includes a discount code to encourage them to buy while the prices are low
• Send an email that includes a discount code to encourage them to buy while the prices are high, followed by an email with a discount code to encourage them to buy while the prices are low
• Send an email that includes a discount code to encourage them to buy
  Not sending an email at all None of these options are particularly appealing, but fortunately, there is a way to handle price increases that can turn angry customers into repeat customers.

Here are few examples for your reference:

Conclusion:

Always include a good reason behind your price increase and explain to your customer the steps you’ll take to keep their business safe in the future.

Author Profile

Deepak Kashyap

A CX expert, keynote speaker, and author, Deepak Kashyap has over 25+ years of experience. His talks on the subject are published on most prestigious forums, and his books have helped to spread awareness about how improving customer experiences can boost sales. Deepak is a prominent speaker who shares his expert opinion about customer experience.

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