small-business smb-productivity

Don’t Shoot the Messenger: How to break the news about a price increase

Don’t you wish you could put your finger on your nose and declare, “not it!?” Sure, it’s childish, but wasn’t that the best system? Remember how easy it was to avoid a chore or task that you had zero interest in doing? Good times. Good times.  

Maybe you can pull it off in your office, but odds are you need to face the music. Nobody wants to deliver “bad” news. (Generally, customers categorize price hikes as bad news.) Remember, your delivery is more important than the substance here. Price increases happen. How you handle the inevitable is key here.  

Keep calm and carry on. 

Keep your cool. If you are nervous or scared of their reaction, they will know. They can smell it. Keep on your resting pitch face. Accept and embrace this price increase internally so that you can project that acceptance and confidence externally. You may or may not disagree with the decision, but either way this is the new reality. You want to be a team player. 

Don’t blindside your client. Tell them in advance.  

Your clients are your partners. You need each other to succeed together. Treat them like an insider. Give them time to prepare for this shift. They may need to make stakeholders on their end aware of the need to increase the budget. Make sure that they are informed and prepared early on.  

Tag in your marketing team for help. 

The same way that marketing generates leads, case studies, webinars materials to support your work, they can be extremely helpful here. Christian Pallazola suggests being prepared and to cushion the blow.

“How much time do you or are you able to give for the heads up? Waiting until the renewal date to break that news directly is obviously gonna warrant more of a surprise on the client’s side. I’d even opt for creating marketing content on a brand level WAY in advance talking about why prices are increasing and what that means for current and new customers.” 

Christian Pallazola

Explain why prices are going up.  

Your company has its reasons for charging more. Maybe you needed to invest to make your business or product even better. Maybe you are offering more options? Don’t overexplain. Just lay out that the price increase stands to benefit [insert their name.]  

Kerry Hew, VP of Zycada, believes in simplicity when it comes to making this move. Don’t treat it like a bold move.

“Just explain the new model. If your clients are getting value and are happy, you can keep it light and direct.”  

Kerry Hew, VP of Zycada

In short, the notion of raising prices did not come out of nowhere. The decision was not made of greed. You have reasons. Name them. Be direct. Answer any questions. Don’t treat it like dirty laundry. It is simply a part of growing your business (and theirs!) 

Don’t apologize.

Keep on your resting pitch face. You aren’t raising your price to gauge your clients. You have solid reasons which you have laid out. You can be sympathetic, but mostly be confidently transparent about your reasoning. You are proud of your product. Don’t be bashful about it! 

Wrap it up into renewal conversations.  

Treat these conversations like renewal conversations but appreciate that this will be more challenging than your standard renewal conversation because of the higher price tag. Review each account in advance and develop a strategy. Identify who can serve as an executive sponsor and what materials from marketing could be helpful to share to support your case for the price increase.  

Use your team to prepare and face this head on! You don’t want to enter these conversations unprepared or alone.  

Realize that this is a negotiation.  

Your clients know this game. They are loyal customers. You don’t want to lose them. They will want to negotiate. Expect them to ask for a loyalty discount. Know what variables you can play with. You may end up offering a discount, but you can have your client consider other options like an addon or a complimentary consultation hour. You may know that a client will walk with a major price increase.  

Matt Calhoun, Director of Business Development at Hoops can relate.

“You can also, if your pricing is flexible, use the increase to get a longer contract signed.”  

Matt Calhoun, Director of Business Development at Hoops

Know what flexibility you have and exercise your options.  

Just because you had one policy in the past, doesn’t mean you can’t switch it up this round.  
This may not be your first rodeo when it comes to price increases at your company. You may have even more trepidation about price increases because you had specific agreements with customers over the years, and you may not only need to increase prices but change your policies with your new model.  

Kévin Moënne-Loccoz, Lead Growth Manager at lemlist, shared how they navigated what could easily be murky waters.  

“Over the years, we’ve changed our pricing plans and features multiple times. For each change, we’ve decided to “grandfather” our existing users, meaning that existing users would keep their old plans and the features that came with them – if they wanted the latest features of lemlist, they would have to upgrade to the latest plans. This year we’ve decided to stop “grandfathering” our existing users by aligning them to our latest plans. 

That was necessary to have a cleaner technical setup of the product, to have more clarity with our users & internal team and of course, it also is a nice perk on the revenue side of things. We warned all the affected users via email 1 month before the change and for bigger clients, we had calls with them 1 month and a half before the switch.” 

Kévin Moënne-Loccoz, Lead Growth Manager at lemlist

Alternative tools and options to keep in your back pocket:  

  • If you know a price increase is approaching, try to bag a win or two for important clients near the big announcement.  
  • If possible, offer a lower-priced alternative for those clients who may not be able to sustain the increase.  
  • Consider including a price escalator in your contracts to avoid the conversation entirely. A price escalator is included in contracts to account for inflation or added costs as your business grows, etc.  

Your client is your client because they see value in your company. Remind them by demonstrating that value. Thank them for being loyal customers and for their understanding. Be genuine and your authenticity will shine through.