Product owners, marketing teams, and brand managers work hard to acquire new customers - we run marketing campaigns and write transactional emails.
That's why a lot of company owners are hesitant to increase product prices and scale their revenue, fearing they would lose the bulk of customers and struggle to get new ones.
Getting through a price increase with no losses in the user base is a challenge - however, there are plenty of strategies and tips that help make sure customers stick to the brand even if products become a tad more expensive.
In this post, we will:
- Examine the reasons that make clients look for new stores or brands after the current ones increase the costs of their offers
- Share tips on proving your worth to clients
- Offer templates that will help you ace the art of writing price increase emails
When do you need to inform about the price increase?
Usually, you would inform your clients about the price decrease to boost sales. But there are cases where you need to explain to your returning customers why your prices have changed, before they discovered this by themselves and switched to your competitors.
Price increase notifications are mostly valid for the following ecommerce businesses:
- B2B products and services, especially with a subscription pricing model (software, telecommunications, engineering services, etc.)
- C2B (freelance platforms, for example)
- digital products and some mono-brand stores
Challenges of writing price increase letters
Notifying your audience that they would have to pay more for your products is not an easy task. Before getting into it, you need to understand the objections most customers will inevitably have when choosing between staying loyal to the new pricing plan or looking for lower-cost offers.
Here are the most common reasons why companies lose clients after a price increase attempt:
Clients don't feel that the product is worth paying more for
Whenever I get a price increase letter from a company I've worked with for a while, a logical question on my mind is "Why do I have to pay more for the same solution I've been using before?".
When getting price increase messages, people might feel fooled - this was not what they were signing up for. That's why marketing teams need to focus on making the link "increasing price - increasing value".
Adding more features to the product or including new experiences to the customer service are all solid ways to explain why you are charging more now and how a client will be better off if he stays loyal to the brand.
Customers feel personally betrayed
Not as common for product company managers, this is, however, painfully true for service providers. If you are supplying specific items or services for a long time and increase your rates all of a sudden, a client might take it personally and feel offended.
Chances are, a customer will think that the team is not interested in the project anymore, not motivated to complete it, and is looking for a safe way-out.
To make sure you stay on good terms with clients, try to make the price increase announcement as general as possible. Emphasize that you are increasing the costs for everybody - not just your client's case.
Give a reason why you have to go this far (increasing taxes, talent shortage, or higher electricity costs are your go-to options) and emphasize with the client to show a personal connection with them and the project.
You will get a lot of follow up questions
"'Why?" "What does this mean?", "Is this permanent?", "Do I get anything new in return?" will be the questions racing through your customers' brains once they open a price increase letter.
Before sending out a cost change marketing campaign announcement, create a list of answers to the most common follow-up questions:
- Why are you raising costs?
- What is the new price going to be?
- Can I have a more basic offer that falls in the former price range?
- Is this permanent or temporary?
- Are there any additional perks if I stick with the store?
- Is the price increase effective immediately?
Once you send the price increase announcement email, this follow-up cheatsheet will definitely come in handy.
You will risk losing clients who chose your store only because of the prices
If you market your store as one providing the cheapest offers in the industry, the odds of losing customers after a price increase are skyrocketing. The good news is, you can find a way out of the situation by improving the range of offers.
Create a service package or a product version the price of which will match the current one - this way, the customers who can't cash out on a more expensive solution will stick to a tool or service range that fits their basic needs.
How to keep clients as you scale prices: 5 tips
If you are dead-set on increasing the cost of your services or product subscription fees, customer retention is your main worry right now. To help ecommerce businesses keep most of their clients after the price increase, we prepared the following tried-and-true strategies.
Explain the value of staying loyal to your brand
If a customer is using your product or service for months or years, they might struggle to grasp the sudden change in fees. It's a marketer's job to convince a price increase announcement reader that a change in rate is a good thing - here's how you can make this point:
- You are charging more to offer extra features or services - this way, the company will become more customer service oriented. For example, you offered only products but now you are able to deliver them, make custom packaging, or you add essential features (in case of software or digital products).
- The fees are higher because you are switching to better materials when creating your products - they are going to be more durable and cost-efficient in the long run.
- You are increasing prices to change the format of your product so that your clients will get more.
All of the above help customers understand how paying more for a solution will bring more value in the long run - that's why they are more likely to go with the updated offer.
Justify price increases
Be transparent in communication with customers. Price fluctuations are a big deal - people deserve to know what made you change your mind about pricing.
Provide regular customers with enough hard proof to back up your claims - if the material cost increase is to blame, show the receipts or Amazon listing licks to prove the legitimacy of the claim. If your team is too small and struggles to handle the project, use real-life cases to show that the talent you have now is not enough to meet people's increasing demands.
Tell customers in advance
A price change is not easy news to take in. The company's customers will need some time to adjust to a new offer, make sure they can afford it, and research the market to see if there's a better offer (it hurts us to know people are looking elsewhere but such is life).
To help your clients take price change easier, give them a month or two of good old rates before switching to a new pricing model. At the end of the day, even if a client is not ready to pay for the product, he might want to make more orders until new rates are enforced.
Personalize the price increase letter
As you increase prices, make sure to prove to your clients that you don't see them as a money-pumping bag but are capable of emphasizing with their feelings and ensuring they don't regret sticking with the new offer.
Here are a few tips that will increase price increase email deliverability and make it easier for readers to relate to your reasoning and appreciate your directness:
- Avoid convoluted phrases like "Dear customer, the company hereby informs you";
- Use I instead of "we" to show the human face behind the brand;
- Be honest and transparent;
- Stay unapologetic - writing things like "We regret to tell you that" will only make your matters worth. "If you regret the price increase so much, don't do it then" - the customer will think.
- Don't pressure people into staying. You need to clearly communicate to clients that it is okay to look for better offers - however, you would be happy if a customer gave an updated offer a try.
Add pricing strategy details
When you message customers about a price increase, go to great length to explain how the new pricing strategy, what additional perks it includes. Here's what you should mention when describing the new pricing:
- Describe the main benefits of the product/service
- Specify what is included
- Answer the most common payment questions - what to do if I purchased a yearly subscription by the old pricing plan, are the payment methods the same, etc.
- Add a CTA to create a sense of urgency and encourage people to make up their minds.
You should offer people a way to opt out as well the way Netflix handled it in their price increase email.
Price Increase Letter Examples
A lot of successful ecommerce websites start off as free or with extremely cheap offers. Eventually, as the business scales and the number of users far exceeds the company's maintenance or productivity threshold, business owners need to consider price scaling.
If you are not confident in price increase email writing skills or what email subject to use, feel free to use the template below to notify your customers:
: [Customer Name], Your Price Change Email Body: Dear [Customer Name] I thank you for choosing [Product Name] and supporting us with your time and dedication. I am writing to let you know that there are some pricing changes to the product's subscription. We had to review our pricing strategy due to [reason]. I want to make sure that [Product name] is always as useful and efficient as possible - that's why [goal the company wants to achieve after the increase] is my first priority at the moment. To make this happen, we had to set the subscription fees at [new price] (right now they are at [current price]). The new versions of [Product name] will have yet more perks for [customer's goal of using the product], such as: If you need some time to decide whether or not to commit to a new pricing plan, don't worry about it. For the next [period of time], you can use [Product name] by its standard rates. I am looking forward to discussing the situation with you and answering any questions. Feel free to reach out anytime. CEO of [Product Name]Conclusion
Price increases are crucial for every company's growth and development. Whether you're using various email marketing tools to notify new changes or do this manually, you definitely shouldn't feel sorry for wanting to take your business to new heights - however, explaining the change in costs to customers in such a way that makes people stay with the company requires skill and practice.
Until you know your user base well enough to create a relatable and personalized price increase letter, feel free to use the template above. Other than that, don't forget to answer follow-up questions transparently and communicate respect for customers' decision - whether it's to the one to stay or to move on.
