The customers who leave over a price increase are usually the ones costing you money. The ones who stay were expecting it.
TL;DR Give 30 to 60 days notice, in writing, with a specific date. State the reason once without apologising. Grandfather selectively, not universally. Expect to lose a few, and expect them to be the wrong few.
When to raise
Clear signals
- You are booked solid and turning work away.
- Your costs rose and your prices did not.
- You have not raised prices in over eighteen months.
- You win almost every quote, which means you are underpriced.
- Your best customers would obviously pay more.
That fourth one is the strongest. A close rate above roughly 80% usually means your prices are below market.
When not to raise. Immediately after a service failure, mid-project, or during a month when you are already struggling to deliver.
How much
Small and regular beats large and rare.
| Approach | Reaction |
|---|---|
| 3 to 7% annually | Barely noticed. Expected |
| 10 to 15% after 3 years | Noticed, mostly accepted |
| 25%+ after 5 years | Shock. Real churn |
Businesses that never raise prices end up needing a shock increase. Annual small adjustments are easier on everyone and protect your margin continuously.
If you are significantly underpriced, stage it. Two increases six months apart lands better than one large jump.
The notice
30 to 60 days. Enough to feel respectful, not so long they forget.
In writing, always. Email or letter. Then mention it verbally at the next visit so it is not a surprise.
Give a specific date, not “from next quarter.”
The email that works
Subject: Price update from 1 November
Hi Michelle,
Quick heads up: our service rates go up on 1 November. Your standard visit moves from $180 to $195.
Materials, insurance and fuel have all risen over the past two years and we have absorbed most of it. This brings us back in line.
Everything else stays the same, including your priority scheduling and the two-year warranty on our work.
Anything booked before 1 November is at the current rate.
Any questions, call me directly on 508-555-1234.
Dave
Why it works
- Specific date and specific numbers. No ambiguity to worry about.
- One sentence of reason. Honest, not defensive.
- No apology. Apologising invites negotiation.
- What is not changing, which reassures.
- A window at the old rate, which converts hesitation into bookings.
- A direct line, which almost nobody uses but everybody appreciates.
Keep it under 120 words. A long explanation reads as guilt.
Do not apologise
The most common mistake. “We are so sorry to have to do this, we know times are tough, we really hate raising prices…”
That paragraph tells the customer the price is negotiable. Some will test it, and you will discount, and the increase will not have happened.
State it as a fact. Businesses adjust prices. Yours is adjusting.
Grandfathering, selectively
Universal grandfathering means your best long-term customers permanently subsidise everyone else, and the gap widens every year.
Better approaches
- Grandfather for a defined period. “Your rate holds until March.”
- Grandfather in exchange for commitment. Old rate if they move to an annual plan or a membership.
- Grandfather your top few by value, quietly, and do not announce it.
- Do not grandfather customers who are already your least profitable.
Never grandfather indefinitely and universally. You are just deferring the same problem to a worse moment.
Handling the pushback
Expect a small number of replies. Most are testing.
“That’s a big jump.”
I understand. It is the first increase in two years and it reflects what our costs have done in that time. The work and the warranty are unchanged.
“I’ll have to shop around.”
That is completely fair. If you find something that works better, no hard feelings. If you want us back, we are here.
“Can you do anything on the price?”
Not on the rate, but I can look at scheduling or bundling if that helps. What would be most useful?
The rule. Do not discount to retain someone who threatened to leave over a 7% increase. You are teaching them that threatening works, and they will do it every year.
Expect some churn, and check who
Losing a few customers is a normal outcome, not a failure.
Then look at who left. If it is your lowest-margin, slowest-paying, most demanding customers, the increase did you a favour and your total profit likely went up despite fewer jobs.
If your best customers left, something else is wrong: the increase was too large, the notice was too short, or the relationship was weaker than you thought.
Work out what a 5% increase across your existing customer base would add annually. For most service businesses that number is larger than the amount they are currently trying to save by cutting costs.
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