Originally published in March 2021. Last updated on November 27, 2024.
Whether you’re struggling to maintain consistent cash flow, can’t cover your operating costs, or are looking to grow your business, increasing your service prices might be the answer.
But before implementing a price hike, you’ll need to communicate the change to your customers to ensure the price change doesn’t damage your relationship.
Using a price increase letter tells customers when to expect a price rise, which services it applies to, and how much it will be. Providing this information in advance gives customers time to adjust their budgets, ask questions, and decide how to move forward.
Keep reading to learn how to write a price increase letter, when to send it, and how to do it professionally to maintain transparency and build trust.
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 be effective, they should include:
- Information about which service costs are increasing
- When the price change will take effect
- The new prices
- A 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 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 the details
- Encourage feedback about your business
- Reinforce your value by reiterating what you bring to the table
Providing price increase letters to your customers helps maintain transparency and establishes trust with your customers. And it also gives them time to consider alternative options that may better suit their budgets, like a lower-tiered package or a different service.
When to increase prices
When and why you raise your prices is directly influenced by your business, service, industry, and pricing strategy. Some of the most common motivators behind price increases are when:
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. And if you don’t adjust your current rate to cover them, you could end up taking a bite out of your profit, slowing your growth.
2. You want a higher profit margin
Even if your costs don’t go up, you may want to set a higher profit margin. It could be because you didn’t set it high enough when you were starting out, you have new growth goals you want to reach, or you want to increase markup.
Your profit margin is going to be helped by selling at the right price and being efficient in the field and not having too much overhead.
Whatever the reason, increasing your profit margin means upping your pricing.
3. You want to grow your business
If you have specific growth goals in mind, like hiring a certain number of employees, expanding to a new service area, or offering new services, increasing prices can help to get you there faster.
If you don’t increase prices, or you don’t increase them enough, your growth will be slow and may be eaten up by rising costs or unexpected expenses.
Instead of a 2% increase, rip the bandaid off and raise 10%.
4. You need to filter customers
When your prices are too low, you attract customers who value savings over quality workmanship.
If you feel like your services are worth more now than when you first started your business, raising prices can help you reach new customers who are more focused on the services you offer instead of how much you charge for them.
While you may risk losing a few customers, it will only make room for new ones.
READ MORE: Overcoming price objections
5. You want to stay competitive
If your competitors are charging more for the same services, you may want to increase your prices to align with market standards. After all, you don’t necessarily want to come off as a discount option.
Price increase letter templates
If you’re ready to increase prices, customize these price increase notice templates to communicate the change to your customers.
Price increase letter sample #1
Use this price increase letter template for general increases.
Subject: [Company Name] Price Increase Notice
Hi [Customer Name],
As you know, [Company Name] is committed to providing high-quality, professional [industry] services to our customers.
We’ve been growing a lot in the last year and because we want to keep offering you great services, we will be increasing our prices by [percentage] starting on [month, day, year]. This will ensure that we can continue to focus on quality by working with the best suppliers and materials to get the job done right, every time.
This means that as of [month, date, year], your invoice for [services] will increase from [current price] to [new price].
We appreciate your support and are happy to have you as a loyal customer! If you have any questions or concerns, please don’t hesitate to get in touch.
Sincerely,
[Company Name]
[Phone Number]
[Website]
[Email Address]
Price increase letter sample #2
Use this price increase letter template to communicate any price change when you start offering new service packages, or you’re in high demand.
Subject: Service Price Increase Notice
Hi [Customer Name],
This letter is to let you know that as of [month, day, year] we will be increasing our prices by [percentage] due to [demand/new service packages].
This means your invoice for [services] will increase from [old price] to [new price].
[Company Name] is committed to providing you with high-quality, timely, and professional [industry] services and this price increase will help us to maintain these values as we grow and move forward.
This price increase will not affect any jobs that are currently in progress or for quotes that are approved before [month, day, year].
If you have any questions or concerns, please reach out via [email address], [phone number], or [website].
Thank you for your understanding!
Sincerely,
[Company Name]
Price increase letter sample #3
Use this price increase letter template to inform customers about price changes due to the cost of labor, materials, or supplies going up.
Subject: Price Increase Announcement
Hi [Customer Name],
On [month, day, year], we’ll be increasing our prices by [percentage], which will help us keep up with rising business costs such as [materials/supplies/labor].
Currently, we provide you with the following services:
[Service 1]
[Service 2]
[Service 3]
Your invoice will increase from [current price] to [new price].
We’re dedicated to providing you with high-quality [industry] services and look forward to working with you in the future.
If you have any questions, we’re happy to help. Get in touch by calling us at [phone number], sending an email to [email address], or visiting our website: [URL].
Sincerely,
[Company Name]
How to send a price increase letter
You can send price increase letters by mail, email, or text message.
However, since letter mail is easy to lose, misaddress, or damage, and not all customers like to receive text messages, email is your best option.
Because most price increases impact all (or most) of your customers, this means drafting emails for each one to tell them how much their services will be going forward.
The easiest way to do this is by using email marketing software like Jobber to create campaigns for specific groups of customers—like customers who get weekly house cleaning or biweekly lawn care.
That way, you can draft and send emails to each group, preventing you from having to customize individual price increase emails one at a time.
Best practices for price increase letters
To make the most of your price increase letters, use these best practices to keep them professional and effective.
1. Tell your employees first
Before you tell customers about a price change, make sure that you 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 customer service inquiries from customers.
Let office staff, employees, and contractors know about the upcoming pricing changes before notifying customers to avoid any issues down the road with inconsistent information.
2. 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.
Providing plenty of adequate notice helps customers feel respected and prepared (plus, you’ll avoid angry phone calls after surprise bills).
Pro Tip: Try to give customers one to three months’ notice before raising prices.
3. 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.
4. 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
5. Explain the price increase
When explaining the cost increase to customers, having a reason helps them understand why they need to start paying more.
No one wants to pay higher bills, so being transparent about your reasoning (like inflation, the cost of materials, or labor market changes) will help justify the increase for customers.
Be as communicative as possible. Give them as much detail as you can.
Here’s how Grove approaches it: “Our costs are going up. Check out this chart, steel’s on the rise. We’ve got two more months at the same price point.”
6. Be open to questions
Give customers a chance to ask questions and clarify information about the price increase by providing contact details in your price increase letter.
And, when a customer can’t work with the price increase, be understanding.
Some of your customers just simply can’t afford the higher cost and which I get, not everyone has an ever-increasing budget.
When that happens, let them know you understand and move on.
7. Offer different pricing options
If a customer can’t afford your new pricing, losing them isn’t your only option. Offer different pricing structures to fit a variety of budgets to cast the widest net.
For example, try good, better, best pricing so customers can go up or down a tier as needed.
If the customer still needs more wiggle room, ask them for a referral to increase their value.
Richard Grove from Wall Control and The Small Business Consultant uses the referral tactic. He shares, “Be honest and tell ’em, look, we’re inches apart where we need to be. I can’t meet you where you’re at and I don’t want to price you out. Is there anything you can do to just help me with my business in general? What I would suggest is to try to spin up some sort of lead generation out of that segment of customers. So bring me a lead, get 10% off your next order, and now we’re back to being kind of on the same footing.”
8. Send a follow-up
Emails can be overlooked or wind up in the junk folder. Sending a reminder before the price increase takes effect ensures your customers have multiple opportunities to get the message and helps to prevent disputes.
9. Use email marketing software
Manually customizing and sending price increase letters leaves them open to human error. It doesn’t take much to accidentally send one to the wrong email address or forget to change the customer’s name.
Plus, it makes segmenting customers into groups so you can send different emails to each one complicated and time-consuming.
To save time and send professional emails, use email marketing software like Jobber to send price increase letters to customers.
This will ensure they’re effective, efficient, and accurate.