When you finally decide it’s time to send your clients a price increase notice, there are a few best practices to follow to help ensure you and your customers are on the same page about what’s happening.
The last thing you want to transpire when you’re making a request is to put them on the spot, surprise them, or make them angry.
That’s why today, we wanted to outline a few best practices to help you send a price increase notice that gets your clients on board (instead of running for the hills.)
1. Give some warning
Surprises + Business = Bad.
Nobody likes seeing a price increase on his or her monthly invoice—especially when it comes without warning. All of the sudden you’re stuck with a higher bill and have no idea why. It feels sneaky and gross.
Which is exactly why you need to give your clients some warning via a price increase notice.
Put yourself in your customer’s shoes: If they came to you and said, “I need you to do 2x more work and I need it completed by tomorrow morning,” would you be obliged to help them out? Probably not.
Instead, if they came to you a month ahead of time and said, “Look: We’ve got a new product launching next month so I’m going to need you to prepare for double your workload in the coming weeks. Can you take that on?” you’d probably be more able to wrap your mind around the project and willing to hop on board.
So how much notice is enough?
30 days is ideal because it gives your client enough time to plan (or re-organize their budget) to accommodate the price increase you’re requesting. It also allows time for conversation and negotiation if the two of you need to work together to find a new balance.
2. Offer a deal
Sometimes you need to find a way to make your price increase notice more appealing to your clients. After all, you’re asking for more money—so what’s in it for them?
Offering a deal is one solution to help you address your needs while making a concession for your client.
For example: You’ve sent a price increase notice that informs your client that prices will increase by six percent on January 1st, but also include that you’d be willing to let them buy the first six months at the old rate if they pay up front.
It’s a win-win: You get cash up front, and they get an extended period at your lower rate.
3. Give the details
Clients want to hear your reasoning behind the price increase. Obviously you’ve pulled numbers from somewhere to figure up how much you want to raise your prices, so have those ready to share.
For example: Say you own a non-profit that transports medical supplies to disaster relief sites. You’ve noticed that your freight charges have gone up 10% due to the cost of fuel. Have the invoice from your transportation company to share with your clients so they have physical proof that your price increase notice is backed by necessity.
When you can validate your request with hard numbers or statistics, it shows that you aren’t just taking advantage of your customers.
4. Have an alternative
If you sense that a client is going to look elsewhere for your type of product or service after receiving the price increase notice, be prepared with another solution that can meet their needs.
Maybe it’s a similar product that is slightly cheaper (but still effective) or a decreased workload that still meets their core objectives. Having other options ready can help retain those customers who can’t afford your price increase.
When you aren’t willing to negotiate and don’t have alternatives to offer, you might be communicating, “Welp, if you can’t pay me more, see ya later.”
If that’s not the message you’re going for—be ready to work together to find a new solution.
Remember, sending a price increase notice is more than a one-step process. There are conversations that need to take place. You need to allow time for the request to be digested. But if you follow these best practices, your request can take effect without a hitch.
What advice do you have for business owners who are sending a price increase letter?