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Update August 2023:

It’s over 5 years since we published this post. Years of COVID and war in the Ukraine have put supply chains under pressure and raised costs. We’re dealing with serious inflation. Employment is high and it’s difficult to find quality new staff. With all these pressures, it’s hardly surprising that businesses of all kinds are raising prices! I’ve even seen some introducing additional charges for work they used to throw in for free!

The ideas and tips in this post are more relevant today than ever.

You want to increase prices.

But you’re scared. What will your clients do? Will some of them leave?

On the other hand, your business isn’t making money the way it is. So you need to change your pricing.

What’s the best way to do it?

Don’t be afraid to increase prices

At some point, you sold to these people and they thought you have value. They’re still with you. They obviously think you’ve got some sort of value. You’re going to have to bite the bullet and do it.

Seven tips to communicate a price increase more smoothly

Check out the ideas below. They may not all apply to your business – but some of them will. Choose the ones which are practical for you, and try them out.

1. Talk, don’t email

You want to have good relationships with your key clients. Good relationships come from talking. Even when it’s a delicate subject like pricing. Scrub that. Especially when it’s a delicate subject like pricing!

If you take the time to call or meet your clients to discuss pricing changes, you are showing that they matter.

Consider taking some time out before you call to look at their business with you. Work out what the impact will be for them. Go in prepared. Show that you are thinking about their business as well as yours. Use it as an opportunity to build the relationship, not sabotage it.

2. Increase value

If you have to increase prices, can you give something more in exchange?

  • A new software feature.
  • An extended guarantee on your service or follow-up support.
  • An add-on service or relevant gift.

For example a massage therapist might offer small bottles of lotion or incense for clients to enjoy at home.

3. Give customers some time

Wherever possible, communicate your price increase in advance.

Why? It helps clients plan their own business finances.

It’s especially important if

  • you’re in a long term contract, as your client may have budgeted costs for the rest of year
  • your product or service is a high part of their costs

You may be afraid to give a warning. Perhaps you think the customer will look elsewhere? It’s true, a few might. But most people and businesses don’t buy entirely on price. If you’re giving good value already, they’d rather stay with you than risk changing. It’s more likely that they’ll try to negotiate. That gives you an opportunity to reinforce your value – and to agree a special client price somewhere in the middle if you think that’s the right option.

4. Remind them how long since your last price increase

Tell them how long it is since you last increased your prices. If you can say ‘I’ve held my prices stable for two years but I can’t do it any longer,‘ you’ve given them a reason to accept your increase.

Clients understand that. They know you’re in business to make money too. They may not like it, but they understand it.

5. Explain how your costs are rising

You can also explain specific rising costs if necessary. This is especially important if you have to bring prices up more than once quickly. Look at the way airlines use a fuel surcharge. Basically, they increase the price when costs increase, but they explain it to make it more acceptable to you. (If only they were also good at removing the fuel surcharge when prices !)

In a service business, costs are often related to staff – especially now. Are your staff a selling point? Consider explaining the cost of training and certification to make sure all your staff are qualified and up-to-date in the services you offer. Emphasise your investment in the best people so that you can deliver the best service.

6. Reward existing clients for past business

red gift standing out from green gifts as specialHere’s another suggestion which works if you’re able to give your clients notice.

Make them feel special.

For example, you could send something like this:

Effective September 1, our prices are increasing by 10%. For you as a valued client, we are holding existing pricing for 3 months after that. So your prices will not increase until the beginning of next year.

So you communicate a price increase – but not for them. Not yet. You’ve given them a deal – before they even asked for it. You’ve already made them feel special. In so many businesses there are special offers for new clients but not for existing business. Doing it the other way round works well.

There’s a great example here.

In certain businesses, you can go even further. If you’re offering therapies, treatments, haircuts or some other kind of consultation where timing is optional, your customers now have a reason to book. You’ve given them a deadline on a deal. So you might actually get more business from existing customers.

7. Leave the door open for big clients to negotiate.

unlocked doorA final point – there will be some big clients.

They matter more than others. They’re a big part of your business. You may need to make lower margin on these clients. That might mean special pricing.

If you’re talking to clients, you’ll be able to gauge how they feel about your proposed new pricing.

If you’re sending out a notification, invite people to contact you with any concerns. Anyone who values your service and has a problem will come back to you. And then you can negotiate on a case by case basis.

Before you simply agree to lower pricing, consider your options. What could you get in return?

  • commitment to a longer term
  • commitment to a larger volume
  • faster payment – this can really help cashflow.
  • even case studies, testimonials and referrals can benefit – unless you already have plenty.

Some other examples which may give you inspiration

Here’s a great case study from CMO which tested six different ways to communicate a price increase. The article also includes some sample ‘scripts’ you and your team can adapt and use.

Also, this article from The Balance gives you some questions to consider as you develop your communication strategy.


In summary

Everybody’s always nervous about price increases.

But they can be done. And it’s best to face them head on. Overcome that fear.

Remember, if clients are going to move, they need another supplier.  They face the cost of finding that supplier. They may not be able to find someone cheaper. Even if they do, they risk an inferior service. And in some industries the sheer cost of switching is high. So there are lots of factors in your favour – as long as you communicate your message well! If you’d like some help with that, let’s talk.


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