Nobody likes telling customers that prices are going up. Yet growth, inflation, and the simple reality of running a business mean you’ll face this moment eventually. The difference between losing customers and keeping them often comes down to how you break the news about price increases.
A well-crafted price increase letter does more than announce new rates—it reinforces why customers chose you in the first place. By being transparent about the reasons and confident about your value, you can navigate this tricky conversation while preserving the relationships you’ve built with loyal customers. Whether you’re a service provider adjusting invoices, a subscription-based ecommerce brand, or a business-to-business (B2B) firm updating a contract, the way you communicate this change matters as much as the change itself.
This guide shows you exactly how to write price increase letters that maintain trust, plus two templates you can adapt for your business.
What is a price increase letter?
A price increase letter is your formal announcement to customers about an upcoming price adjustment for your products or services. Whether delivered as a letter or email, it needs to clearly state the new pricing, the effective date, and—here’s the crucial part—the reasons behind the price change that make sense from your customer’s perspective.
Think of a price increase announcement as a strategic opportunity. Yes, you’re delivering unwelcome news, but you’re also reminding loyal customers why your product or service is worth every penny. Done right, it can actually strengthen the relationship by showing that you respect them enough to be transparent and that you’ve exhausted other options before taking this step.
Price increases typically affect three main business models:
1. Service-based businesses. The broadest category, including freelancers, agencies, consultants, and tradespeople who charge for their time and expertise.
2. B2B suppliers. Companies that sell products, raw materials, or components to other businesses, often on a recurring basis.
3. Subscription and membership models. Businesses where customers pay a recurring fee for ongoing access to a product or service.
Why do companies raise prices?
Deciding when to raise prices is a key part of your pricing strategy. It should never be an arbitrary decision; it should be a response to specific business realities. Sending a price increase letter is appropriate in different scenarios, including these reasons that justify adjusting prices:
Increased operating costs
A rise in operating costs is the most common driver. When the costs to run your business go up, your profit margins shrink, unless you make price adjustments. These increased costs include:
- Higher costs of materials. The price of raw materials, component parts, or your software licenses has risen.
- Higher labor expenses. You’ve increased wages to attract talent or are paying more for benefits.
- General inflation. The overall cost of doing business—from utilities to rent to shipping—has risen.
Product or service enhancements
When you’ve invested in significantly improving your products or services, your pricing should reflect that added value. The key is that the customer is getting more for their money than they were before. These improvements might be:
- Powerful new features that add meaningful capability to a product they already use
- Higher-quality materials that make a product more durable or effective
- Faster, more responsive customer support so they get help when they need it
- Enhanced service experiences through faster shipping or a more personalized attention
Market realignment
Many businesses enter the market with intentionally low prices to attract customers and gain a foothold, a strategy known as penetration pricing. While this works for building an initial customer base, it rarely stays sustainable long-term.
Once you’ve built a strong reputation and a loyal following, it’s time to transition your pricing to match the value you deliver. This isn’t just a price bump; it’s a planned evolution reflecting your company’s growth and the proven track record. Aligning your rates with industry standards signals that you’re a competitive, high-value player in the market.
To fuel future growth
Staying competitive means investing in infrastructure and research and development. A price adjustment can generate the capital needed to maintain quality while funding innovations that will ultimately serve your customers better.
How to write a price increase letter
- Give ample advance notice
- Provide justification
- Be direct, honest, and upfront
- State the specific details
- Express appreciation
- Offer a point of contact
- Consider offering valued customers a deal
The way you announce a price increase can determine whether customers accept it grudgingly or take their business elsewhere. These seven strategies help shift focus from what customers lose (lower prices) to what they keep (exceptional value):
1. Give ample advance notice
Customers handle price increases better when they have time to process and plan. Provide advance notice so your customers can address their budgets. The standard for how much notice to give is typically 30 to 60 days, but for business-to-business (B2B) contracts or high-value annual subscriptions, 90 days is even better.
2. Provide justification
Customers are more accepting of a price increase if they understand the reason behind it. Connect the change to a tangible benefit for them or a clear business necessity. Explain that increased operating costs necessitate the change in order to maintain the continued quality they expect, or that the adjustment lets you invest in new features they’ve requested. Be honest without being overly apologetic.
If you don’t already have a clear statement of why someone should pick your product over another company’s merchandise, consider articulating your value proposition. Remind existing clients why they do business with you. Briefly mention your product’s or service’s benefits, recent improvements you’ve made, or the exceptional support you provide. Show them that even at a new price point, they are still receiving excellent value.
3. Be direct, honest, and upfront
Don’t bury the lead. State the letter’s purpose in the first paragraph, but do so with sincerity. While you should be confident in the value you provide, it’s crucial to also be honest and acknowledge that you’re delivering difficult news.
Customers appreciate transparency far more than corporate spin. A vague introduction will only make them feel misled, while a tone that’s overly cheerful or unapologetic can feel dismissive. Start with a clear and respectful opening that owns the change. Instead of: “We’re excited to announce some updates to our service offerings,” try something more direct and honest. Here’s an example: “We’re writing to let you know about an upcoming change to our pricing. We value your business, so we wanted to share this news with you directly.”
4. State the specific details
Avoid ambiguity by being specific. Your announcement should explicitly outline:
- The exact plan, product, or service that is changing
- The old price versus the new price
- The specific date the new pricing will take effect for their account
5. Express appreciation
Acknowledging your customers’ loyalty and importance softens the blow significantly. Phrases like “valued customer” show your appreciation, as do references to their “continued support” or “continued patronage.”
6. Offer a point of contact
Demonstrate that you’re open to discussion by providing a direct point of contact for questions. Instead of a generic email address, which can feel like a black hole, provide the name and email of a specific person, like the customer’s account manager or a department head. This personal touch demonstrates a genuine willingness to hear their concerns and assures them their message will be read by a real person.
7. Consider offering valued customers a deal
To mitigate the possibility of losing clients, especially for many who are on legacy plans (older, discontinued price tiers), consider offering them a chance to lock in the old price if they sign up for an annual plan or a discount for early renewal. This gives your clients a sense of control and rewards their business.
Price increase announcement letter template
The exact wording you use will need to be adjusted for your own business’s circumstances, but here’s a general price increase letter template for an initial announcement.
Subject: An important update about our pricing
Dear [Customer Name],
On behalf of [Company Name], I wanted to let you know about an upcoming change to our pricing structure. After careful consideration, we are implementing a price increase effective [effective date].
For more than [number] years, we have been committed to providing you with [high-quality services/high-quality products] at a competitive price. Due to [State the primary reason, e.g., significantly increased operating costs, investments in key product improvements, rising costs of materials], we have adjusted our prices to ensure we can maintain the level of quality and innovation you have come to expect from us.
The price adjustment will allow us to continue [Mention a specific benefit, e.g., investing in new features, expanding our customer support team, improving our infrastructure]. We recently launched [Mention one or two improvements or added value points] to provide you with more value, and this change will help us continue that momentum.
Your new price for [product/service] will be [new price]. This change will be reflected on your invoice starting with your next billing cycle after [effective date]. All customers on existing rates will remain at their current rate until that date.
We deeply express our appreciation for your business and understanding. Our commitment to providing you with an exceptional experience remains our highest priority. If you have any questions, please don’t hesitate to reach out to our team at [business contact email/phone number].
Warm regards,
The [Company Name] team
Price increase reminder letter template
Sending a reminder about a week before the change takes effect helps ensure that your customers or clients are informed. It keeps your new pricing structure top-of-mind and shows professionalism.
Subject: Upcoming pricing update on [effective date]
Dear [Customer Name],
This is a friendly reminder that our new pricing structure, which we announced last month, will go into effect on [effective date].
As a valued customer, we wanted to ensure you had this update well in advance of your next invoice. As of the [effective date], the price for your [product/service] will be [new price]. This adjustment will allow us to continue delivering the continued quality and service you deserve.
We are so grateful for your business, and we appreciate your continued support. If you have any questions about your account or this update, please feel free to call or email us at [business contact email/phone number].
Sincerely,
The [Company Name] team
Price increase letter FAQ
How do I announce a price increase?
The best way to announce a price increase is with a price increase letter or email sent at least a month in advance to all existing customers. For high-value or key accounts, a personal phone call should precede the written notice. Don’t announce a price hike for existing customers solely through social media, since it’s too impersonal and easy to miss.
What is an example of a notice of price increase?
An example of a price increase notice is an email that lets a subscription service’s members know the monthly cost of the service is going up. The notice communicates all necessary information and mentions the purpose directly in the opening sentence, thanks the customer to show they are valued, provides a reason for the price adjustment, reinforces the value, and details the specifics. Offering a channel for questions demonstrates transparency.
How do I word a price increase message?
It’s important to be direct and honest, while also including value-oriented language. Discuss the benefits by framing the change around how it ultimately helps the customer. Don’t blame suppliers or inflation excessively. Although these could be valid reasons, focus more on how you are providing more value.
