How to Announce a Price Increase (Without Tanking Your Sales)
So, you want to raise your prices without scaring off your customers. So did we.
Most SaaS leaders want to increase their prices at one point or another. The current issues with inflation, supply constraints, material costs, and the talent crunch are pushing software companies to reconsider their pricing structures. If you are convinced that your product is underpriced, you need to do something about it … without pissing off your customers.
Here’s the good news: With a bit of planning and intentionality, you’ll be able to execute the price increase and turn it into an opportunity for growth.
When we decided to increase the prices for Close, we had three simple goals:
- Keep current customers happy
- Maintain high conversion rates
- Turn the price increase into an opportunity to increase sales
Did we accomplish our goals, you may ask? We did. Here’s how you can do the same.
8 Tips to Increase Prices Without Pissing Off Your Customers
Price changes can sometimes be accompanied by a sense of dread for you and your loyal customers. But it doesn’t have to be that way.
Every price increase should be approached as an opportunity to provide more value, expand your possibilities for growth, and ensure your long-term financial stability. You need the tools to get you over the hill in one piece, without destroying your current and future customer base.
So remember, with new pricing comes new opportunities. Let’s get you over the hill.
1. Set the Date Sooner, Not Later
Picture this: “Hey, team! We decided last night to raise our prices, starting today.” Panic ensues, people faint, disaster. Let’s avoid that.
We recommend setting a specific launch date several weeks or months before the new pricing takes effect. Why? Higher prices are going to impact most of your company. From your sales team to your customer service team and everyone in between, your people will need time to adjust marketing materials, sales pitches, and website information.
They also need to prepare well-informed answers to upcoming customer concerns. You want everyone on the same page regarding the reasoning for the increase, the actual cost difference, and any logistical considerations moving forward. This takes time, so factor that in.
Pro Tip: Big changes (like pricing changes) often require extra work from your teams. Make sure you have some morale-boosting, de-stress strategies built into the process.
2. Announce the Pricing Change Early and Directly
There’s a certain code of conduct expected with price increase announcements. You want to communicate with current customers early to ensure they have enough time to consider how the new price vs. the old price will impact them. You also want to be direct—let them know what’s coming, and let it be from you.
Besides current customers, new customers considering your product or service shouldn’t be blindsided by the pricing increase. That’s just bad form. So, you need to get the news out—early and directly. How to do that?
Announce the upcoming price increase on your blog and in personalized emails. Post something on social media, and consider a website banner or “tag” next to your pricing page that indicates when and how prices will change.
Get to the point. Don’t dress your message up or sugarcoat it. No apologies about the price increase. No salesy explanations. No BS. Just give it to people straight:
We’re increasing pricing. Here is what it will be. Here is how it will affect you. Let us know if you have questions. Thanks.
For example, here is the price increase letter template we used to ping our existing customers and subscribers about the change:
And here’s just one example of a response:
Transparency throughout the entire pricing transition is key to keeping your customers happy. Treat them as you want to be treated—and you’ll do just fine.
3. Explain How the Change Affects Current Customers
Your current customers—especially if you serve many small businesses—will be the first to raise concerns about pricing changes.
First on the agenda, you need to decide whether or not to exempt current customers from the pricing increase. At Close, we decided to do so. Existing customers would keep the old pricing for life for the user seats they had already signed up for.
Alternatively, you could offer the current pricing plan, but with some conditions. For example, exempt them from the increase if the customer pays upfront—with timelines and limits.
Your decision on the subject will depend on your specific business case. But be aware that raising prices on existing customers can damage your loyal customer base.
When Zendesk did this, an angry thread ensued on HackerNews, which pushed a guy called Girish Mathrubootham to start his own help desk software solution. His company, Freshworks, now employs almost 4,000 people and has more than 150,000 user companies (among them large clients like Cisco and Honda). Moral of the story? Be careful. If you fumble your current customers, a competitor will gladly scoop them up.
To reduce customer churn, you need to decide on current customer pricing, communicate it early and directly, and then prepare to answer any concerns. It’s a good idea to put together an FAQ—this frees up your team for more case-specific inquiries, while quickly spreading accurate information.
4. Highlight the Value You Deliver and Be Transparent
Value-based selling. Sales wouldn’t be what it is today without it.
Similarly, when communicating with customers about the price increase, you want to highlight the value of your product. According to Forrester, the product itself now outweighs all other selection criteria for customers. “The most important attributes customers look for in a company or brand are: 1) strong product quality and 2) good value for money.” So, what do you do? Highlight your product’s quality, and the excellent value customers receive for their money.
Emphasize any recent changes that increased the value of your product, and those exciting new features that are taking your service to the next level.
For example, when we added the Calling on Sequences feature, we did a blog about it. We posted about it on social media. If we had a price increase planned, we might have incorporated it into the messaging. Remember to highlight your fantastic product—that’s what they’re paying for, anyway. The better quality should help justify the price hike.
But remember that value extends beyond your product—great customer service, brand reliability, and your kick-ass team all add value. Don’t sell yourself short.
Here’s the bottom line that you can share with customers.
Bad news: Higher prices.
Good news: More bang for your buck.
Finally, transparency is important, particularly with your long-standing customers. Sure, your product’s value is increasing—but you also have business concerns to consider (if they’re a business too, they’ll understand). Inflation is hitting everyone. Operating costs and the price of raw materials are going up, not down, and you need to make some strategic pricing changes to ensure the longevity of your product/service so that you can continue to meet their needs. Easy as that.
Customer loyalty isn’t complicated. Deliver value, and be transparent.
5. Consider Promotions for Current Customers and Trial Users
Remember our first goal with the price increase? Keep current customers happy. Customer satisfaction and retention rates shouldn’t (and don’t have to) take a hit from your updated pricing decisions.
Consider promotions for current customers and trial users. This can look different for everyone, based on your current pricing structures and any considerations specific to your business, customers, and industry.
Maybe your pricing is set up to allow monthly or annual payments. Consider allowing existing customers to pay upfront for an annual plan and lock in the lower price for a limited time (or for life). If you are not exempting current customers from the price increase, maybe you want to throw in several free users—to offset the change. Do what makes sense to your situation, always with the goal of customer satisfaction.
Here’s how we did it. If existing customers and current trial accounts decided to add new user seats within the next 14 days, they would keep the old pricing for all involved. After 14 days, they would have to pay the new (higher) prices. This led to a huge bump in seats sold for Close during those 14 days.
To be clear: As a general rule, we don’t recommend offering discounts. Companies win by being valuable, not by being cheap. However, in the situation of a pricing increase, where a top priority is reducing customer churn and keeping current customers happy … it’s probably a good idea to consider promotions and discounts for your loyal ride-or-die customers.
6. Offer Support to Discuss the Changes
You can safely assume that your customers will have further questions about the price increase. A lack of clear information runs the risk of your customers churning to a competitor—and you don’t want that.
For many business owners, personal communication is key to maintaining their trust and loyalty. After the initial price increase notice, make yourself and your team available to discuss the changes.
Offer them the opportunity to chat with high-level people in your organization, too, like managers and executives. Some customers you will never hear from—they’ll just pay whatever you ask without question. Others will need more attention.
For those that do, make sure you’re truly accessible. Do you have live chat? Great. Want to share your executives’ company email addresses? Awesome. Place relevant phone numbers in bold and say “call us any time”? Now you’re getting the hang of it.
Be intentional. Be accessible. Be prepared.
7. Update Your Marketing Materials, Team, and Social Media
Pricing is an aspect of branding. Changes to the brand require the full attention of the marketing team. Thus, changes to the price require the full attention of the marketing team. (See what we did there?)
This tip should remind you of tip #1—giving your team a head start to prep before the new prices take effect. Marketing has a lot to do.
Once your team is briefed on the details behind the price increase, and the specifics surrounding the actual price difference, promotions in play, and customer numbers, they need to focus on messaging. Like tip #4, highlight the enhanced value and product quality—and make sure those messaging threads run throughout your updated marketing materials.
The website pages, email messaging, and social accounts all need to reflect the new changes. Make a list in Asana (or however you organize team projects) to make sure that all your touchpoints are covered with the updated information.
Pro tip: This is a good time to make sure your product features are updated as well!
Across social media, and especially LinkedIn, prepare posts in advance of the price increase—and then prepare to answer questions in the comments, or guide customers to the appropriate contact person (tip #6).
With email subscribers, consider adding a CTA that allows them to respond directly to the price increase announcement email—or that directs them to schedule a time to chat with someone about how the changes will affect them. Intentionality and genuine care for your customers gives you the best chance of pulling off a successful price increase.
8. Say Thank You
Let’s face it: As great as your company and product is, you wouldn’t be anything without your amazing customers. So, tell them that.
Thank them for their loyalty and continued trust in you. Assure them that their well-being has been considered as you’ve planned these price changes, and that the best is yet to come.
Navigating a price increase can be tricky—taking the calculated risk could still start some unfortunate fires. If you lose a customer, be polite and understanding, and thank them for their business. They’re making the decision they think is best for them, which is the same thing you’re doing with this price increase. Trust your gut and don’t retract—say “thank you” and then get to work.
What Happened When We Announced a Price Increase?
So, how did we fare with our own price increase? We pissed off all our customers. Just kidding.
When we raised our prices:
- We kept current customers happy
- We maintained high conversion rates
- We experienced a huge bump in paid seats
And our average customer lifetime value increased by over 10 percent.
Listen: It’s impossible to predict what results you will get. This post, however, should set you up for success as you make these key decisions, adjust your internal materials, and communicate strategically with your customers.
As you search for that perfect price point (which is probably higher than your current price), you need a CRM to centralize your team and streamline your workflow. Our choice? Close.
With our CRM, you can use automation tools and robust info-sharing capabilities to effectively communicate with customers through any transition your company will face (including pricing transitions.)
Test us out with this 14-day free trial—we promise, thousands of sales reps say we’re worth every cent.