How to Manage Price Increases Without Alienating Customers

How to Manage Price Increases Without Alienating Customers

The price of everything is going up. A mix of supply chain disruptions, increased fuel costs and rising inflation is making price hikes a regular sight.

Add the impacts of Brexit, and tax increases to cover the Government’s pandemic spending and you realise companies have to respond.

If your business costs more to run, you need to think about raising your prices. But how can you manage price increases without alienating your customers?

Make it clear

The first key to a smooth price rise is communication. Explain yourself in a timely and clear way and customers will be a lot more understanding.

Speak directly to customers about any price changes. Talk to larger clients first and, if possible, let those in the leadership team speak to their counterparts. This will lend weight to the announcement and give an opportunity for questions before complaints.

With key accounts informed, make a general announcement to the rest of your customer base. Email is a good way to do this. 

Whatever medium you use, be honest. Lay out the reasons you are making a price change clearly and don’t slip into excuses. If you genuinely couldn’t carry on without increasing your prices, say so. Don’t create fictional reasons or winding long explanations. Your customers will respect the honesty and react much more positively than to any fabrications.

Also stay away from moaning or complaining about your own situation. If you’re struggling with costs, your customers probably are too and they don’t need to hear your in-depth struggles. If you’ve held off from upping your prices for as long as possible, you can mention it but don’t try and make you (or business) into a martyr.

Finally, keep the overall message positive and don’t fixate on apologising. However sorry you are to be raising your prices, focusing too heavily on this can sound like you aren’t in control of your business. 

Add Value

For your price to appear more reasonable, it often helps to add some more value to your offering.

Consider what you can add that justifies a higher price. If you are in professional services, can you add extra hours? If you sell a SaaS product, can you give bonus subscriptions or provide additional contract hours for customisation? Or if you sell a product, can you add a complementary product or service – something like extra batteries, a longer warranty or a free first service?

These additions don’t cost you too much to supply but they will enhance the appeal of what you’re company provides. And these added extra will help justify price rises in the eyes of your customers and show that you are still committed to giving them a high-quality experience.

Introduce Different Pricing Options

To avert pushback against price rises, you can introduce new packages. 

For example, you could offer a discount for a longer contract, keeping the price the same if clients commit for longer periods. This may feel counter-productive for a ‘price increase’ but it will give you a longer period of guaranteed income from them which can be just as valuable.

Another option is to re-package your offering with various levels of service. Offer a basic package at the current price but with fewer benefits or support options. Then offer additional levels with higher prices and extra benefits. If some of your customers choose to switch to the higher level, then you will have successfully upsold them.

Raise Your Prices Gradually

A higher price communicates a higher value proposition. You need to adjust your prices upwards as time goes on so that you continue to position your offering correctly. But you don’t need to do it all in one go.

It may be simpler – and more palatable for customers – if you do it incrementally. If time allows, and your margins are not too squeezed, then a slow series of small price increases can be very successful. Depending on what you sell, managing your pricing in this way may be tolerated better than a single large price hike. And in some cases – like with groceries, for example – a small price increase may be accepted without much notice.

Focus on Customer Retention

The old marketing adage is true: it is cheaper to retain customers than to attract new ones.

If you can focus on retaining good customers by giving them excellent customer service, then this is a more cost-effective strategy in marketing terms. If you can go further, by concentrating your efforts on ensuring their continued success through using your product or service, and by becoming a trusted partner, then price becomes less of a driver of their business.

In turn, these well-serviced, highly esteemed customers will repay you with their loyalty. As devoted customers they are less likely to leave – and are more open to price increases.


With an ERP like NetSuite, you can successfully manage and update your pricing so that you maintain and maximise profits. NetSuite offers a single system to control multiple pricing strategies and models for all your customers. To find out more about NetSuite’s pricing management, contact us today.


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Stephen Adamson


[email protected]

(+44) 115 758 8888
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