Price Increase Letter: Tips & Templates for Service Businesses

What is a price increase letter?

A price increase letter is a message you send to customers to let them know you plan to raise your service pricing. To ensure your message is as clear and effective as possible, it should include: 

• Information about which service costs are increasing.
• When the price change will take effect.
• The new prices.
• The reason for the increase.
• Your contact information.

Why are price increase letters important?

Price increase letters benefit both you and your customers. By using them, you can: 

• Build transparency and trust by being open and upfront. 
• Give customers time to adjust to the fee increase before it takes effect. 
• Provide alternative options for budget-conscious customers.
• Explain the reason behind the new pricing.
• Prevent misunderstandings and confusion by outlining important details.
• Encourage feedback from your customers.
• Explain the value of your services so customers will pay the higher price.

Providing price increase letters to your customers helps maintain transparency and trust. It also gives them time to consider alternative options that may better suit their budgets, like a lower-tiered package or a different service.

Price increase letter templates

If you’re ready to increase prices, customize these price increase notice templates to communicate the change to your customers. 

How to send a price increase letter

You can send price increase letters by mail, text message, or email. 

• Mail: If you have only a few customers, sending letters or text messages can work. But letter mail is easy to lose, misaddress, or damage, and it’s hard to track. 
• Text message: Text messages are a quick and easy option, but only if you know your client is OK with receiving texts from you. 
• Email: If you decide to manually send emails, you’ll need to draft a message for each customer to explain how much their services will cost going forward. You’ll need to customize every message with their email address, name, and service before sending it manually. 

You can also use email marketing software like Jobber to create campaigns and send emails to specific groups in batches. For example, customers who get weekly house cleaning services or those who book an annual spring cleaning.

Then you don’t have to worry about customizing emails for each customer or sending them out one by one. 

Best practices for price increase letters

When you’re writing and sending price increase letters, follow these best practices to keep them professional and ensure they’re effective:

1. Tell your employees first

Before you tell customers about a price change, communicate it to your staff first. When all of your staff members are on the same page, it ensures consistency in quotes and invoices, as well as responses to customer inquiries.

Let office staff, employees, and contractors know about the upcoming pricing changes before notifying customers. This ensures information is consistent and helps you avoid any issues down the road.

2. Test price increases before you roll them out

If you’re worried about customer backlash, don’t raise prices for your entire customer base at once. Instead, start with a specific zip code, service, or customer group. 

That way, you can use bookings, cancellation rates, customer feedback, and quote acceptance rates to determine whether or not you need to make adjustments. If you don’t get any negative feedback, you can move forward with the change. But if you do, consider changing your price increase messaging, lowering the amount, or increasing value. 

3. Give customers plenty of notice

If you have recurring customers on weekly, monthly, or seasonal contracts who will be affected by a price increase, notify them well in advance. Aim for 1–3 months’ notice before raising prices.

Providing plenty of adequate notice helps customers feel respected and prepared. You’ll also avoid angry phone calls after surprise bills.

4. Review profitability and win rates

Price increases should be based on real numbers. Before choosing an amount to increase rates by, review your profitability and win rates to see whether a price change makes sense. 

For example, if you’re winning nearly every job, it could be a sign that your prices are too low. And if your profit margins are shrinking even though your sales are steady, it may mean rising costs are eating into your profit. 

Using real data helps you make informed decisions so you can raise prices strategically instead of guessing. 

5. Be clear and concise

Make sure your letter is direct and to the point. Clearly state the new pricing and when it will take effect. Then, explain the increase and how customers can get in touch with any questions or concerns. 

Burying your price increase in a lengthy email will only confuse or frustrate your customers.

6. Audit and prune services

A price increase is a good time to review your services to see which ones are turning the most and least profit. Some jobs take more time, money, or materials than they’re worth, while others bring in a lot of money for less work. 

Instead of raising prices evenly across all your services, find out your lowest-margin services and either raise your rates or stop offering them altogether. This frees up time for higher-profit services and ensures your team focuses on services that support long-term growth. 

7. Add a personal touch

Adding a customer’s personal details to your price increase letters lets them know you value their business. Try to include: 

• Their name.
• The services you provide to them.
• How long they’ve been a customer.

8. Explain the price increase

No one wants to pay higher bills, so including a reason for the increase (like inflation, the cost of materials, or labor market changes) will help customers understand and accept it.

When to increase prices

When and why you raise your prices is directly influenced by your business, services, industry, and pricing strategy. Common reasons to increase prices include: 

1. Your costs increase

If your overhead costs or operating expenses go up, you may need to raise prices to stay afloat. Things like inflation, market prices, supply chain issues, and labor costs can impact how much money you have to pay your bills. 

Adjusting your rates to cover rising operational costs keeps profit and growth steady, so you can continue to run a successful business. 

2. You want a higher profit margin

Your profit margin is the money you have left after all expenses have been paid. It prevents you from having to cover costs out of pocket and ensures you can invest in growing your business. 

Even if your costs don’t go up, you may want to set a higher profit margin. For example, maybe you:

• Didn’t set high enough margins when you were starting out.
• Have new growth goals you want to reach.
• Want to increase markup.