How To Write A Price Increase Letter (Examples & Templates)

A price increase letter is a letter sent by a seller notifying customers about a rise in prices. This might have been brought about by a change in the industry where the raw materials needed, or the services offered to produce your product become costly.

How to Justify Price Increase

The price increase can be a sensitive topic to clients. Some, if not all, of your clients will have different opinions and complaints concerning the change. They will need sensible reasons and even feel betrayed but at the end of the day, the main goal in business is to increase profits rather than maintain customer satisfaction. you as an entrepreneur.

Communication is vital in such a situation. You can sync your sales department and the customer service teams to provide customers with consistent information. This information would consist of valid reasons like the change was due to the possibility of the rapid growth of population in the area, therefore there was more demand for the product which led to the price rise. Perhaps the company had to buy imports at a higher price, the clients will be affected by having to pay more for the products. It could also be a possibility of the inadequacy of industrial production, particularly in respect to basic consumer goods or agricultural inputs, to match the rising demand this would also cause a rise in price levels on the supply side. It may be, to avoid deficit spending.

Deficit spending means spending to the point of exceeding revenue over a period, which resulted in an increased level of prices.

All these would be among many reasons justifying the price increase and they should be well communicated to your team. This is because the customers might want to siphon information from people in the sales department and the same time, enquire from the people in the service department. Generally, the best way you can deal with this situation is to assure your clients that this change will improve product and service quality.

How to Write a Price Increase Letter

Price increase letters are formal documents. As a professional businessman or woman, you want to send your clients these letters ensuring that by the end of the day, you have made the changes and they are still willing to work with you. You need to be keen on the details you want to cover in your price increase letter.

Start with an appreciation

In business, client appreciation is salient. Show appreciation for customers by stressing the value they delivered. Mention how they have impacted your business.

For example, in the Tank industry,

“First and foremost, we would like to thank you for your partnership during the years and for allowing us to serve your needs, thanks to your big purchase in 2020, we got five more clients who increased sales by 16% that month. Your satisfaction is very important to us, and we hope that we have been successful in providing you with excellent customer service and products.”

Write a confident statement

If you want your business to be successful, you need to get comfortable with raising your rates. Being direct makes your expectations very clear, and as a result, you are more likely to get what you want.

For example, in a Lubricant company,

“Please be advised that [name of company] will generally increase prices up to 4% on all Passenger Car, Motorcycle, Commercial and ancillary products effective, Monday, June 18th, 20XX.

Excite through an extension

Build relationships with your customers. In a price increase letter, giving a customer an extension of the current rate is one of the easiest ways to gain their loyalty.

For example, you could say,

“My rates will apply from $300 to $500 on April 24th. However, since you are one of my most valued clients, I’m offering you a complimentary extension of current rates until May 23rd.”

Have an open discussion

Give customers a way to contact you. Make them comfortable by having a dialogue; this is by sanctioning them to express their ideas regarding your service or product and offering to answer their questions. This will emphasize your dedication.

For example,

“What do you think of this new rate?”

Conclude with a future-focused statement

End your price increase letter with an encouraging message of high expectations of working with them on future projects.

This can be written as:

“As we start the year, I’m more than happy to continue working with you in business, to a better future!”

Professional Price Increase Letter Samples

The examples below will show you the different ways you can easily format your price increase letter:

Free Templates

Here are free downloadable templates of the price increase letter that may help in better understanding:

Tips to Disclose Price Increase

Here are some great tips that you should consider when disclosing price increase to your customers:

• Recall what your goals are- Getting intentional with your goals means creating a clear connection between you and customer satisfaction. Remember the results the customers expected when they chose your products or services and write down what you have achieved.
  An example would be,

Since February 2020, we have achieved;

• More customers in need of Azithromycin
• One more staff in the dispensing department
• Demand for Gentamycin rose by 10%
• 3 more clients from the United Kingdom

• Follow up- A regular follow-up gives customers a chance to engage with you effectively. It is therefore advisable to send a follow-up email.

“Greetings Harriet,
What did you think of our new prices?
Please get back to us if you have any questions. Thank you!”

• Know when to move on- Not every client will be pleased by the changes in prices, that is why you need to try and justify reasonably. If you and the client still contradict each other, the best way to deal with the situation is to drop him/her and find better clients.

• Directly communicate with customers- As an entrepreneur, it would be advisable to reach out to every customer and let them know about the change. Acknowledging your customers is a powerful way to show them that you have them in mind while making the decision. It would be unfair to your customers if you don’t communicate directly to them about the price increase. They might drop you and opt for other sellers.

• Tell customers in advance- Telling your customers in advance gives them time to process and weigh out their options. Ensure you give them at least 1-2 months‘ notice for your new rate to commence. For example, during a pandemic, things get tough, and jobs are lost. A landlord might want to increase rent due to a rise in the expense of utilities; giving your tenant a heads up a month or two before, may save him/her the agony of having to end up on the streets.

• Ensure quality will also upgrade with prices rising- A customer who has been purchasing a certain product for years at a specific price will be confused when he/she hears about a sudden rise in the price of the product. Remember, higher prices attract better quality products and services to clients. You will have to convince the customer that with an increase in price, there is an improvement in the quality of the product.

• Inform the organization before the customer- The customers might want to consult with one of the frontline workers about the changes in a company. It would be a serious case if your employees were not made aware of the price increase and end up charging the clients the original price of the product. Your sales will be reading different from what you except and your next step would be to accuse your employers. Therefore, to avoid being in such a situation, it would be advisable for them to learn and contribute to the reasoning and logistics behind the changes in price.

• Be available for customer queries- An entrepreneur looks forward to providing the best relationship with his/her customers. Let your customers know that they can communicate with you or anyone in your company at any point in time about any concerns regarding the price increase.

Frequently Asked Questions (FAQs)

Conclusion

Telling your loyal customers about a price rise can be delicate. You will be worried about how they might react or even reject it and drop you as a seller. All in all, you must remember that by the end of the day, you will need to run a profit-making business. You must handle the issue of price increase authentically to ensure that the customers understand the situation and are willing to cohere to it.