When you’ve grown to love a product or a service, learning you need to shell out more money to maintain the status quo can be a bummer.

How the company approaches the price increase, however — from gathering data, to writing the price increase letter to customers, to implementation — makes a huge difference in how customers will interpret the decision.

When your company has decided to raise its prices, there are some clear do’s and don’ts that can ensure you’re putting customers first every step of the way. Here’s our playbook for managing a price rise with the utmost care, including cutting-edge research and examples of both the right and wrong way to communicate the hike in a letter to your customers.

How to raise prices with a spirit of generosity
Although a clear strategy is the backbone of any effective price increase, at the heart of a positive experience for customers is an underlying spirit of generosity.

Business leaders always have to toggle between prioritizing generosity and growth.

When it comes to pricing strategy, we recommend leaning into generosity.

Help Scout “grandfathers” old pricing plans for two years, meaning that current customers don’t see any rate increase until 730 days after raising prices for new customers. Our goal is to make the transition as seamless as possible, particularly for our loyal customers. With the same ethos, we never push upgrades unless they benefit customers directly.

As impactful as raising prices can be for your bottom line, higher short-term revenue at the cost of an even higher customer churn rate is not only ineffective, it’s dangerous. Implementing a price change with a sense of generosity ensures you’re never forfeiting your integrity or the trust of customers.

When you put customers first in every decision, you build goodwill and have more leeway when you need to raise your prices. Patrick Campbell, Co-founder and CEO at Price Intelligently, explains why with the results of their company’s research:


“Across the board we found a correlation between a higher customer service rating and willingness to pay. These results may seem intuitive from an e-commerce perspective. Yet, on the SaaS side, they’re of particular interest, because customer service isn’t something we necessarily think about as a top priority in the world of software, at least in the aggregate.”
That finding doesn’t surprise us, though. Customer service has always been about maximizing value. When you demonstrate your worth in every interaction, you gain more leverage to implement a price rise that’s mutually beneficial.

Dedicate significant resources to testing price changes

Given the intricacies of a successful pricing strategy, there’s a temptation to “wing it” and see what happens. Don’t fall for it. A price change should never be in reaction to a competitor, a customer, or even a big shift in the market.

Instead, the best companies focus on building out a pricing infrastructure, or the mechanisms that help you analyze potential pricing strategies and gauge their performance over time. According to McKinsey & Company, businesses that fail to build this infrastructure fall into one of two traps: They underestimate the power of intelligent pricing, or they choose not to invest in a critical price-testing model.

Unlike a lot of other product investments, developing a rigorous, data-based pricing strategy has a quantifiable ROI. The same article from McKinsey suggests that strategically increasing a price by 2-4% could increase profits by 15-25% 
. No matter your business, knowing how to increase prices at your company hinges on a deep understanding of your product and its ever-changing value in a dynamic market.

The pricing process also requires deliberate, continuous testing over time. Given that, don’t refer to a price as everlasting or “forever” (something we learned the hard way!) or offer lifetime guarantees. Customers envision a lifetime as their lifetime, not the lifetime of the product.