How to Write a Price Increase Letter

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It can be nerve-wracking to send a price increase letter to your current clients. However, you're unlikely to lose many customers over a modest rate increase. To increase your rates without causing clients to reassess whether to do business with you, be straightforward and focus on adding value rather than justifying the increase. If you have a particularly valuable customer, consider issuing him a temporary extension of current rates.

Keep it Direct and Simple

Be direct and keep the letter simple. Your client's time is valuable, so don't beat around the bush. A short salutation, a statement that you will be increasing your prices by a certain amount on a specific date, and a note thanking your client for his business is really all you need. Don't apologize for the rate increase or ask for client input on the matter. If your client senses that you're tentative or unsure about the increase, he's more likely to push back and ask to keep his current rates.

Justify the Increase

You don't need to spend much time, if any at all, justifying your reason for the rate increase. The truth is that your customers aren't interested in the fact that you haven't increased rates in many years, that you're behind on bills, or that you're working extra hours to make ends meet. If you do want to justify the increase, stick to a simple phrase like, "Due to the rising cost of doing business, I'll be increasing my rates" or "To keep my prices level with the market, I'm increasing my rates."

Add Value

Rather than justifying the rate increase, consider adding value to your services to soften the blow of the rate increase. If you're increasing your prices because your products have improved in quality, explain how additional product features will benefit the client. If you've learned a new skill or can provide an extra service that doesn't take much time, include that in your letter. For example, a bookkeeper might say something like, "Since I've obtained enrolled agent status, I can now file your tax return on an annual basis for no extra charge."

Provide Lots of price Increase Notice

Give your clients a good amount of notice before sending the rate increase letter. Your client has probably experienced rate increases from other suppliers and vendors, but some departments need time to request a higher budget or need an approval from management to pay higher rates. Ideally, give your client at least a few months notice before raising rates. If the customer is particularly valuable or you do a lot of work for him, offer him an extension on the rate increase. For example, you could say, "My rates will from x amount to y amount on January 1st. However, since you're only of my most valued clients, I'm offering you a complimentary extension of current rates until March 1st."

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About the Author

Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.