anyone got a price increase letter i could take a nosey at please cheers richy. Logged Bourton Vale Window Cleaning Services 6 The Leaze.
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.
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 honors 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.
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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 . 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.
McKinsey hints at three keys to help pinpoint how to increase your prices. At Help Scout, we’ve taken a similar approach. By planning ahead, you radically increase the likelihood of a positive outcome for everyone, including your customers.
Our intention is always to strike a balance between maximizing the value we bring to customers and sustaining the company’s momentum. These two drivers are not necessarily mutually exclusive, but the right pricing structure requires a complex, ever-changing calculation that’s derived from constant analysis of the two.
At any given time, a team of up to three Help Scout engineers is assessing pricing and packaging options with the above balance in mind. During the testing stage, our team focuses on two clear but often contrasting indicators: price sensitivity data from A/B tests and the data that underpins our intention to deliver the strongest price-performance ratio in the market.
It’s not uncommon to run more than 10 A/B tests to identify the right packaging and pricing mix for customers. No fewer than a dozen people on all sides of the company contribute to the change from the initial analysis through to customer communication. We take everything about the process seriously, and that’s the way it should be.
Some companies follow all of the above advice, then drop the ball instead of running it across the finish line. If you’ve ever been taken aback by a sudden price hike, you know what I mean. It doesn’t matter how much thought a company puts into a price increase if they can’t communicate with empathy and transparency, and way in advance.
Research shows customers perceive a price rise as fairer when the company communicates the change directly. The breadth of the explanation needs to match the significance of the price increase — i.e.,
We’ve learned to be painstakingly deliberate about every aspect of the communication around price changes. Our team starts by sending a price increase letter to customers via email and in-app notifications six months in advance. We strive for transparency and empathy, giving customers all the information they need to make an informed decision.
Here’s a look at two examples of letters to customers about a price increase from totally different organizations and contexts.
We’re writing to let you know about a pricing update that affects your account.
Starting July 1, 2018, your subscription price will be $60 per month, plus tax where applicable. This increase will take effect on your next billing date on or after July 1, 2018.
We’re constantly introducing new features and improvements to QuickBooks. You can always visit our blog for the latest updates but here are a few highlights:
Automatic Sales Tax: Get custom rates automatically added to invoices based on location
Contractor Self-Setup and E-filing: Easily gather contractor information and efile 1099 forms
Projects: Stay organized and track profitability project by project
Progress Invoicing: Get paid faster by invoicing in installments across the lifetime of a project
Desktop App: Faster access to QuickBooks Online via your desktop
For more on the pricing changes, visit our FAQ page. Other questions? Give us a call at 844.832.2902. We’re happy to help.
— Your QuickBooks Team
What QuickBooks did wrong in this price increase letter to their customers:
I’m writing to inform you of a 5% increase to the cost of membership, which will take effect as each membership comes up for renewal, beginning on February 1, 2017. This modest adjustment — our first since 2010 — equates to an additional $10 per year for Young Patrons, $11 per year for Young Patron Family Members, $15 per year for Individual Members, and $16 per year for Life Members, Family Members, and Proprietors.
By restricting the amount of the increase — and by continuing to subsidize more than 80% of the costs of membership — we seek to keep the Athenæum affordable. Even after the scheduled adjustment, a year of access to everything the Athenæum has to offer will cost less than such “optional necessities” as high speed internet access, gym memberships, and newspaper subscriptions.
The circumstances prompting this change are compelling. Simply put, our costs are growing at a rate poised to outpace our income. (To read an overview of the Athenæum’s financial position, click HERE.) In order to provide the services, spaces, and collections that our members rely on, and so that we may continue to evolve and excel, we must take meaningful steps to grow our revenue. To that end, we are launching a multipronged effort to increase our sources of support. The membership rate adjustment is only one of several such initiatives. Others include:
Redoubling our fundraising efforts. Currently, many members do not contribute to the Annual Fund, perhaps because we have failed to explain the essential role that such contributions play in underwriting nearly one quarter of our activities. By communicating more clearly the value of every gift — in all amounts — we hope to double participation in the year ahead.
Raising the price of Proprietors’ shares to a rate more consistent with their historical values.
Increasing, ever so gently, the number of corporate event rentals.
Instituting (by mid-2017) an admission fee for visitors from the general public. (Of course, our members’ guests and affiliates of sister organizations and of the museums in our reciprocal admission network will continue to visit free of charge.)
Piloting an hourly fee-for-research service intended to assist scholars unable to travel to Boston to consult rare materials.
We will monitor each of these initiatives closely — so that we may refine and pursue those that prove to be successful, and discontinue those that are not.
All of us at the Athenæum feel grateful to be able to rely on your support. By coming together at this critical juncture, our community of curious, open-minded thinkers will continue to pursue knowledge — as we find it written on the page and displayed on the walls, onscreen, and face-to-face — here, in this oasis for reflection at the heart of our bustling city.
Elizabeth E. Barker, Ph.D.
Stanford Calderwood Director
What the Boston Athenæum did well in this price increase letter to their customers:
Reading these two contrasting price increase letters, you can feel the difference in the effect they would have on a reader. The missing pieces in the QuickBooks letter add up to the sense that the company cares less about its customers and more about its revenue. The detail and tone of the Boston Athenæum letter add up to a sense of gratitude for their transparency.
When you craft your own price increase announcement to customers, communicate with honesty, humility and appreciation, which pays major dividends.
Every day, businesses put enormous effort into gaining the trust of customers. You don’t want to throw it all away with a 2% price hike. Approach raising prices with the highest level of attention and expertise that your company can afford. With a clear focus and dedication to digging into the details, you’ll be able to optimize a strategic price rise without risking the customer relationships at the center of your success.
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How the company approaches the price increase, however — from gathering data, to writing the price increase letter to customers.
Do you need to raise the prices you charge to your cleaning customers?
You started your cleaning business to make a profit and earn a living. Most cleaning businesses start out with the owner doing everything - marketing, cleaning, buying supplies, and even the bookwork. As your company grew, you added inventory, added employees, and added new customers, all of this added to your company expenses.
Maintaining a steady profit is crucial. Cleaning business owners must find the balance between profit margins, providing quality services, and cultivating healthy relationships with customers to remain prevalent in the cleaning industry.
These tasks can be extremely difficult to balance in today's market of stiff competition and continual escalating costs of doing business. Wages and benefits are climbing, equipment and supply costs are increasing, customers budgets are tightening, and competition is always waiting in the background to undercut prices.
You have felt that it is time to raise prices on the services you charge your customers but have held back. Perhaps you were afraid to losing customers if you initiate a price increase.
Why Raise Prices? Unprofitable Customers Means Unprofitable Business
Customer profitability is the profit that your cleaning company makes from providing services to your customers. It's the difference between your company's revenues earned and costs associated with providing cleaning services. Tracking each of your customer's profitability is an important step in understanding which customers are below, meets, or exceed your company's profit requirements.
When you started out, you may have underpriced your services in order to get new customers or perhaps you lacked experience in pricing cleaning services. Whatever the reasons, you've discovered you underpriced your services. Now what do you do? You can begin by reducing costs, increasing prices, or both.
The cleaning service industry can be a profitable business, but if you're not watching the bottom line, those profits can begin to evaporate as the cost of doing business increases. Payroll expenses, employee benefits, gas, equipment and supply costs, just to name a few, will increase, and in doing so, decrease profits.
Your goal is to track each of your customer's profits year to year and make the necessary adjustments to their billing to keep your profit margins reasonable and within your company's parameters.
Just take a look at things you buy on a routine basis - gas, milk, cleaning supplies, electricity - prices do increase and sometimes take a big jump!
But, before raising prices to your cleaning customers, go back and take a look at your original contract or agreement. Does it state the original price will be good for a certain length of time? If it does, you will not be able to raise your price until that time frame has expired. If not, how long have you been cleaning for that customer?
Even if you originally underpriced your services you may not want to increase your price if you have only been cleaning for the customer a short time. Most cleaning companies wait at least a year before increasing prices. If you don't have anything written in your cleaning contract/agreement about price increases, you should start doing so. Many companies guarantee their price for a year and state that they take cost of living increases each year (for example, 4%). Or they may state something like, "we reserve the right to increase prices after one year."
Before figuring out a new price, go back through your original proposal to make sure that you covered everything and are making a profit. If your supply costs have gone up dramatically or if you have added expenses (workers comp or more insurance because of hiring employees), make sure the price increase will cover the extra expenses.
It's important to thoroughly evaluate all your company operations before implementing a price increase. Are there areas within your company where you can cut costs and overhead? Perhaps by negotiating lower rates on insurance, merchant account fees and other expenses, your bottom line will be healthier and you can avoid a price increase in certain situations.
Would additional productivity training increase your production rates? Would more efficient equipment improve productivity? What about the cleaning chemicals and tools you're using? Are they slowing your employees down? Anything you can do to improve productivity goes straight to the bottom line.
Examine each customer separately. What is your current relationship with this person? If you have not been in personal contact with them or you have received a handful of complaints recently, a price increase is the last thing you want to do.
If your customer has not seen or heard from you in the past 6 months, or your only contact is from a handful of complaints, how do you think they will react to a price increase? A price increase is the last thing you want to do.
Don't be greedy when it comes to profits and raising prices. Make sure the reason(s) for the increase are justified.
Don't be troubled, however, to raise the price on a customer who is a constant complainer,especially if their complaints are not justified. You may need to raise your price to cover the extra time spent in their facility.
If you have a good relationship with the customer and they are satisfied with the services you provide, most people will understand the reason(s) for the price increase and stick with your company.
Always notify your customers of a price increase. Do not send out an invoice with their new price without an initial notification. This will lead to upset and probably lost customers.
Here are the steps to follow to initiate your price increase:
Your cleaning company's survival depends on charging your customers appropriately and making a decent profit. Good customers will understand a price increase and be happy to continue using your services. Don't be surprised if a customer that leaves because of a price increase soon comes back! Many customers that choose the lower priced bidder eventually discover that the company cannot fulfill the contractual needs. This means their facility is not as clean as when your company provided their cleaning services.
If you do have customers that cannot afford the price increase, re-work the numbers and/or negotiate new cleaning frequencies. They will put their trust in you and your professionalism to create a price and service program that will work for both parties.
Increase your staying power by maximizing profits. You want to be known as the best cleaning company on the block, not the cheapest. You want the reputation of providing quality service at a fair price.
Your company goal is to maintain profitable customers. You need to have a strong customer base, provide quality services, and continuous nurturing of the business relationship.
If your customer has not seen or heard from you in the past 6 months, how do you think they will react to a price increase?
Don't be greedy when it comes to profits and raising prices. Make sure the reason(s) for the increase are justified.
Copyright The Janitorial Store. All Rights Reserved
Jean Hanson has been helping owners of commercial cleaning companies build a more profitable and successful cleaning business since 2005. Jean is also a Certified Duct Tape Marketing Consultant and provides marketing services through her marketing agency, Marketing Systems By Design.
You may also be interested in the following forms:
Price Increase Letter Version 1
Price Increase Letter Version 2
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A price increase for cleaning services is due. But how do you raise your fee for maid service? We Ask a House Cleaner about pricing structure and the inevitable price increase.
Angela Brown, The House Cleaning Guru says you’ve got to make money to stay in business. The cost for maid service goes up just like everything else, which means a price increase and a change to your cleaning contract.
Learn what to do if clients won’t pay when you raise your prices.
Today’s sponsor is https://HouseCleaning360.com
#HouseCleaning360 is a referral database of the best in house cleaning service providers.
Hi, Angela. It’s Bridget from Michigan. I have a question. I’ve had a client for almost a year now and she is a problematic customer to work for. I have taken your advice in the past and put myself in more “a shark tank“, so that has been helpful and encouraging.
But she has also bought another dog about five months ago, so it’s been more hair and just more clean up. But I’m also to the point where I do need to do some price increases. I have never done that before, so I would like some direction. I’m not sure if there’s a standard letter that I should submit. I’m not sure if she’s going to get offended, dispute, or decide that she no longer wants my services.
But in any event, it’s just something I feel I need to do, so I would appreciate your advice on this. I thank you so much for your time in this. Have a great day.
All right. You’re going to have price increases.
Okay. I know, it’s uncomfortable.
But you’re going to have to bring it up to your customers because guess what? They are the ones that are going to have to write the bigger checks than the ones they are writing now.
So, what do you say to a customer who is going to get a price increase from you? That’s a great question.
All right. What you’re going to do is you’re going to give them a month notice.
You’re going to send out a letter to all your customers and you’re going to say something to this effect.
Hey. I’ve enjoyed cleaning your house, servicing your home, and working with your family. Due to inflation and the rising costs of doing business, I’m increasing my prices. This will be effective such and such a day, 20% or whatever the amount is that you’re going to increase it by.
If you charge by the hour or you charge by the job, you’ll figure out what the price is that you want to increase. But we’ll say 20% for sake of argument.
The price is going to be different from every person based on the contract you have with that family.
Don’t write a blind letter to send out to all your customers. It has to be custom with each person’s name and the new amount of their monthly or bi-weekly amount owed.
“I’m excited my business is expanding and I appreciate your business and your support. If you have any questions, please let me know. Here’s my phone number, yadda yadda.”
Then you go ahead and you send out this letter.
Now, you have to expect that there will be some people that will have sticker shock and will haggle over price.
I don’t know why, but there always are.
Like, that’s so much money. Compared to what?
There are people that go and spend $250 to $400 getting their hair done. Compared to what?
If this is a service that you want, this is the new price.
So we’re not back in the 1970s. This is not a price that gets to stay around forever.
Rate increase, it is as simple as that.
We have all seen price increases on things like gas, food, electricity, water, etc. Everything raises its price.
After a while, so do you. It’s just a part of life.
You place way too much importance on it. You’re afraid what people are going to think of you and that they’re going to hate you because you raise your prices.
Maybe they’re going to go find somebody cheaper. Maybe some of them will. Oh, my goodness. What if that happens?
Well, guess what? Nothing happens. So you just replace them with another customer and you’re going to replace them with a higher price. Boom. You still got your higher price.
Yes, some of them are going to go find somebody new, but not everyone. It’s a given you have to raise the prices of your cleaning customers.
There are customers that are loyal to you and they’ll say, “Wow, that’s a lot of money. I guess I’ll have to come up with more money.”
They come up with more money when the gas prices go up, or when they get a bigger water bill than they expect. They come up with the money somehow.
Now, they got to come up with the money for housecleaning.
Don’t place so much importance on raising the price. It’s not the end of the world. It is part of doing business. if you e
So, cut out the emotional end of it, because it’s not an emotional thing. It’s a business decision.
If a customer’s like all angry, like, “Oh, you raised my price.”
I know, right? And own it. “Yeah, my bills went up, too.” It’s part of doing business.
Okay, so that’s my two cents for today. You’re going to be fine. Until we meet again, leave the world a cleaner place than when you found it.
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anyone got a price increase letter i could take a nosey at please cheers richy. Logged Bourton Vale Window Cleaning Services 6 The Leaze.
As your experience and expertise grows, there inevitably comes a time when you decide you want to raise your rates to better reflect the value of your services. The tricky part - letting your clients know without alienating any of your ol’ faithfuls or scaring away any potential new ones.
Whatever the reason for your price increase, how you handle the communication of your rates rise could be the difference between whether you keep a client or see them huffing up the road to your competition.
Here are 10 rules to ensure your clients don’t baulk at an unwanted surprise when they open their next invoice:
It can be easy for clients to assume that you’re just getting greedy. To avoid this assumption, let customers know that your price increase is strategic to allow your company to grow while still offering the same level of great service.
Focus on what benefits your clients will be able to receive from your services - such as additional service or support, extra resources, increased availability, shorter turnaround. These may be things that you already do anyway, but you don’t actually promote as part of your service.
In a similar way, emphasise the value your service delivers, even with a higher rate. Are there some simple add-ons you can deliver that will provide even more value to your clients? Have you done extra training, have new skillsets in your team or expanded your service offering?
Kari DePhillips, director of The Content Factory, says that how you communicate the rate hike is just as important as planning the increase itself.
“If you create a complete list of your accomplishments (including added value items that you don’t charge extra for) and show a lot of progress and goal achievement, the clients won’t want to end the partnership." – Kari DePhillips
“We contacted our clients and told them that they’d experienced more placement lately because of our upgraded capabilities and talented hires, and we had to raise their rates for the first time in 12+ months if they wanted to keep our representation”, DePhillips says. “Some of our clients reduced their services but all stayed on and several took the rate hike without complaint”.
Keep it matter of fact, with no beat-around-the-bush-small-talk. Your message should include three points: 1. We value your business. 2. Price changes are a part of business. 3. This price increase is justified. Peow! Peow! Peow! Message delivered. If you pad it out with fluffy small talk your clients will sense your lack of confidence a mile off.
Devesh Khanal, owner of web design company Devesh Design, finds that a direct, casual approach is the most effective way for him “ I say: ‘I’d be happy to do that for you. Also, just to let you know, my rates have gone up since the last time we worked together. They’re now $125/hr. Let me know if that’ll be an issue’. That’s it. If clients make a fuss, they’re out. If they don’t, all the better (and many don’t).”
If a take-it-or-leave-it approach feels a little too harsh to you, you could think about offering an extension on current rates to valuable clients. Consider presenting your services in different packages at set price tiers - if your clients no longer want to pay your gold package rates, they can opt for a silver package with reduced services.
Don’t spring a price increase on clients without any notice, but set a deadline for the change and offer clients one last opportunity to take advantage of the lower rates. It will be best to schedule this for a time when your workload is a little quieter so you have the capacity to deal with an influx of work.
Your clients don’t want to be told that they are paying more money but not actually getting anything additional for their fee. Simply blaming your rates raise on your own increased costs is a lousy way to frame it (even if it is the truth).
Allen Greer’s company, Miami-based digital agency, Fuze is experiencing a period of rapid growth, and Greer explains this to his customers with this approach: “I’ve found there is one fail proof explanation that I’ve never had a client argue with. It goes like this: our goal as a company is to continually improve the quality of our services. This means hiring the most talented people we can find to produce the best possible work. Our clients reap the benefits of improved quality, so it’s a mutually beneficial business decision”.
So you’re scared of telling your clients? Shouldn’t you more be afraid of the risks your business faces if you don’t raise your rates? Take a look at the work you’re already doing for clients. You’re good at what you do! Can they actually afford not to use you? Increasing rates is a standard business process, but you need to deliver the message with confidence or else your clients won’t be convinced that the increase is justified.
If you have the opportunity, have a face-to-face conversation with your clients about your pricing. You should however always follow this up with an email or letter outlining the change and detailing your new rate sheet, just so you’ve got your backside covered in case they want to come back and question your invoice.
Khanal suggests setting pricing expectations with existing clients right after a ‘win’. “For example, I’ll say: ‘Great! I’m glad you liked the design. Let me know what else I can do. By the way - I’m raising my rates in the fall, so we can discuss that before the next project’. So you’re setting the expectations for a discussion later, and when you do bring it up, they’re not surprised”.
You’re in business; your aim is to grow and nurture a successful enterprise, and you need to do what’s right for you to ensure the on-going success of your agency. The reality is that clients should expect a price increase. It isn’t arbitrary, and you’re not here to negotiate. As Greer says, “Rate fluctuations naturally follow a company’s growth plan. You can’t grow by staying static”.
There is always a risk that you may lose your clients - whether they can no longer afford you or would simply prefer to look for an alternative option. That’s not necessarily a bad thing. You might feel the loss of a low-paying client in the immediate short-term, but it opens up your capacity to take on a higher-paying client to take that place. If you’re losing clients by the droves, then you're probably not really offering the value that you promise, and a service review might be in order.
To make things easier, we’ve put it all together for you below. This is taken from WorkflowMax's awesome ebook, 15 Emails to Keep Clients Happy. If you want 14 more email templates to keep agency clients happy then don’t forget to download it - it's free!
Do you have any more tips? Share them below. And if you want to ensure your agency is charging what you're worth, then sign up for our up-coming FREE webinar with Jason Blumer by clicking on the link below!
Price increase announcement letter to client House Cleaning Prices, Price Increase, Business Service Amount Increase Announcement Letter Guest Services.