How to Raise Your Price and Keep Customers: What to Say in Your Notice

You are about to tell a customer their invoice will be higher. Keep the notice short, true, and, when demand is tight, plainly say that alternatives are scarce. A price increase is a normal business move, but the wording can make it feel like a betrayal. Many businesses are making this move at once; a KPMG survey found that 55% of companies planned to raise prices within the next six months.

A small increase is easier to accept

Start by checking the size of the increase. A modest move is easier to explain than a large one, and it gives the customer less room to compare you with a cheaper option. In the Canadian self-storage study, the scarcity reason was especially effective when customers already believed good alternatives were scarce and the price increase was relatively small.

Ask yourself whether the increase is small enough that the customer can absorb it without a long negotiation. For a large jump, consider splitting it into smaller moves, with a short gap between them. The later move should still be true, but it should not feel like a surprise.

A small increase is usually one that does not change the customer's decision to buy. The size is probably right when the customer can still say yes without a long pause. It is too large for one notice when it would push them to a competitor. You can still raise the price, but you should give them time to adjust.

Match the reason to the market

Choose a reason that is true and useful to the customer. Avoid a long apology. A short reason gives the customer a clear answer to the question they are already asking: why is your price going up? The answer should match the market condition, not your internal story.

A customer retention study used a Canadian self-storage company to test how different price-increase reasons affected customer retention. In that study, customers who received a market-based scarcity reason were 30% less likely to leave. The authors were Hoorsana Damavandi of the University of Tennessee, Kersi D. Antia of Ivey Business School, and Praveen K. Kopalle of Dartmouth College.

Use a scarcity reason only when it is true. Do not claim that alternatives are scarce when your market is full of similar options. Say that plainly when demand is tight and customers already know good options are limited.

Do not lead with your own costs. In the Canadian self-storage study, cost-based and quality-based price-increase explanations produced the same rate of lost customers as no explanation. You may still raise the price when your costs rose, but the customer does not need a long explanation of your ledger. You may mention improved quality briefly, but do not make it the main excuse.

Send one plain notice

Send the notice once, in writing, with the effective date and the new price. A short email or letter is enough. Do not send a follow-up that apologizes again, unless the customer asks a question. The notice should answer what is changing, when it changes, and why it is happening.

To notify customers of a price increase, a small business can use an email, a letter, or a note on the invoice. The customer should see the same message in one place, not a different version in each channel.

A notice might say that the price reflects higher demand and limited availability.

Put the new price and effective date in the same message, before or after that line. When your market is not tight, drop the demand sentence and keep the price and date. The customer should not have to search for the number or the date.

Expect replies. Some customers will accept the change and ask for an updated invoice. Others will ask why. Answer the why once, in the same tone as the notice. Do not start a negotiation in the reply. When they push back, you can offer a shorter transition, but only if that is true for your business.

Run the four questions before you send

Run the four-question price-notice checklist before you press send.

• Is the increase small?
• Is the reason true?
• If demand is tight, say so plainly.
• If not, send a plain notice and say it once.

If any answer is weak, rewrite the notice and run the questions again.