Dear SaaStr: How Do You Let Customers Know You Are Raising Prices?
Raising prices is always a delicate process, but if you handle it well, it can actually strengthen your customer relationships.
The key is to communicate clearly, justify the increase with added value, and give customers enough time to adjust.
Here’s how to approach it:
- Earn It. I.e., Lead with Value.
Be honest — have you earned it? Before you even mention the price increase, highlight what’s new or improved about your product. Have you added key features, improved performance, or expanded your support? Customers are much more likely to accept a price hike if they see they’re getting more value in return. For example, when Zoom and Shopify raised prices, they paired it with announcements about new features and improvements to justify the increase. - Be Transparent. No Surprises.
Don’t try to sugarcoat it or bury the news. Be upfront about the price increase and explain why it’s happening. For instance, you might say, “To continue delivering the level of service and innovation you expect, we’re adjusting our pricing.” Customers appreciate honesty, and it helps build trust. - Give Advance Notice. No Surprises.
Always give your customers plenty of time to prepare. A 30-60 day notice is standard, but for larger enterprise customers, you might want to give even more time. This shows respect for their budgeting process and gives them a chance to reach out with any concerns. - Offer a Grace Period or Grandfathering. No Surprises.
For loyal customers, consider offering a grace period where they can renew at the old price for a limited time. Or, grandfather them into the old pricing for a set period. This softens the blow and rewards their loyalty, which can go a long way in maintaining goodwill. - Communicate Through Multiple Channels
Don’t rely on a single email to get the message across. Use multiple touchpoints—emails, in-app notifications, and even personal outreach from your customer success team for key accounts. The more personal and direct the communication, the better. - Prepare Your Team
Your customer success and sales teams need to be ready to handle questions and objections. Equip them with talking points, FAQs, and examples of the value customers are getting for the new price. If your team is confident and aligned, it’ll make the transition smoother. - Frame It as an Investment
Position the price increase as an investment in their success. For example, “This adjustment allows us to continue improving the product and delivering the results you rely on.” Customers are more likely to accept the change if they see it as a way to get even more value in the future. - Be Ready for Pushback
Some customers will push back, and that’s okay. Listen to their concerns, and if necessary, offer temporary discounts or custom solutions to ease the transition. But don’t backpedal on the increase entirely—it’s important to stand by your decision if it’s justified.
Ultimately, the goal is to make customers feel like they’re getting more than they’re paying for.
If you’ve truly added value and communicate that effectively, most customers will understand.
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