Writing a "price increase" letter

By Marlene Jensen
Author of 46 Ways to Raise Prices -- Without Losing Sales

Here are 3 things to think about when you have to write a price increase letter to your customers:

1. Do you really have to write one? In some industries it is both expected and demanded by customers, but certainly not in all. If some of your competitors are not sending price increase announcements, consider whether you must. Certainly in consumer markets a price increase letter is usually a bad idea as consumers generally do not know what they paid before and thus might not have seen your new prices as an increase.

2. Justify the increase by increases in your costs. Although the value of your product should be calculated by its benefit to your customers, not by your costs, buyers have a strong reaction to "fair" pricing. If you can show your costs went up, it makes your increase more palatable.

3. Justify the increase by it being less than other increases. Look at the costs of everything your customers currently buy, including business purchases (if you are B-to-B) as well as things they buy as consumers. You may be able to package your increase as follows:

Good news! We're continuing to hold down costs for you!

Price changes since 2005:

  • 45% increase on price of housing
  • 63% increase on cost of medical insurance
  • 24% increase on [other B2B products they buy]
  • Just 19% on [your product]

For more help on raising prices, including how to position it in a price increase letter, check out:

Pricing Strategy Associates

Voice: 570-244-2261 • PO Box 256, Lock Haven PA 17745
© 2005-2010 Marlene Jensen. All rights reserved.