Latest from HRi

20 October 2022

How to notify your clients about a price increase

  • HRi blog

Posted by: Mary Asante

A price increase in your service is never good news to break to your clients.

If it is not managed appropriately, it could be a risk for your consultancy business. Not all your clients may accept the price increase, and you may lose business as a result. Therefore, informing your clients of the rise in your fees can be a daunting task, although necessary.

Your aim should be to retain loyalty when informing your clients of the price increase. Your clients have the right to know and understand why the increase has taken place, what has changed and how continuing their business relations with you is mutually beneficial. This is irrespective of the inconvenience of the higher fees.


Informing your clients of a price increase

There are several ways you can inform your clients. You can do so via phone, email or in person through a representative from your organisation. But a letter is still the best and most professional way of announcing a fee increase. This can be delivered either via email or post, some may choose both.


Reasons why you need a fee increase notification letter

There will be many reasons why you need to increase your fees for your services. These reasons usually validate the change in the value of your services. But your clients need to understand them. This is so ultimately, both parties can maintain healthy business relations.


Common reasons why you might need a price increase notice:

Improvement or diversification of your skillset

You may have attained skills, technologies, and experience to provide more value to your clients. These improvements and diversifications can fairly justify the increase in your service price. This is acceptable as it is backed up by the promise of an improved service.

The market price

You may have been charging your customers far below the market price for the same product or service. This may be a result of an undervaluation of your service or a strategy to improve your competitive edge. Here, a price increase is well justified, considering your service is up to par with market standards.

Rise in your business cost

This is the most fundamental reason for a price increase is a surge in your business’s overhead cost. This could result from more expensive software installation, increased raw material price, increased workforce, and a rise in rental costs. It is any factor that affects the profitability of your business.

Inflationary Increase

You may increase your prices in line with an increase in inflation. This type of increase is normally factored into the terms of the service agreement that you have in place with your client.

You want to improve your bottom line

Profitability, whether to enable business growth or to bolster your personal finances, which could be why you want to increase your prices. If the quality and scale of the service remain unchanged, this is more difficult to justify for small businesses. But this is how businesses often protect their profit margins.

Business restructures

Switching business models to improve profitability may necessitate re-evaluating your prices. For example, switching from time-based to project-based. This usually happens mostly when small-scale businesses intend to supercharge their growth and expansion.

Client quality

Price increase in your business might help filter out clients who underpay or overwork you. Working with businesses that value your services is mutually beneficial and fosters strong professional ties.


price increase letter writing



Tips to inform fee increase

Informing your clients of a price increase entails challenges and uncertainties. But it must be done one way or another. Justifying the price increase logically is the key to getting your clients to accept it and maintain business with you. In most cases, if the business holds a good relationship with its clients, it is likely they can see the value. The Big HR Independents Fee Report 2022 reports that 63% of HR consultants do not find their clients negotiating fees. A further 16% rarely find clients negotiating fees. And only 1% experience clients frequently negotiating their fees.

On top of that, it is also a good idea to guarantee that the same or improved quality of service will continue to be delivered.


Five top tips for informing your clients of a price increase:

Provide the rationale

Be transparent when announcing an increase in your service fees. Reasons may be due to a rise in raw material cost or procurement of new software for service improvement. These reasons must be communicated to your clients. Being transparent will retain their trust, and a better chance to retain them to continue doing business with you.

Be Direct

Your clients need to know about the increase in the price from you and not from any other source or through sudden realisation further down the line. Therefore, it is recommended that your relevant representative personally contacts them to discuss and then make the notification of a price increase letter via email.

Give plenty of time

Give reasonable notice time to your clients about any changes in your service. It is best to start informing as soon as you make the decision and before the new prices go into effect. Don’t forget to factor in any timescales you have agreed to in contracts/agreements for any price changes as this is what the client will expect and needs to be honoured. This gives the business to reassess its options. It will also communicate to them that your business has their best interests in mind.

Reassurance of service quality

A price rise can put off your clients. But you can tackle the situation by promising quality service

Don’t be apologetic

If you seem too apologetic when notifying your clients, you are undermining your own service’s value to the clients. Don’t forget you have every right to call for a fee increase if you have a good reason for doing so.

It can be overwhelming to inform your clients about a price increase. But you can get your clients to accept the new rates and continue business with you with the right strategy. From conversations with our members, we understand it can also be a daunting task. Therefore, we have made a template letter available via the HRi templates.

Author: Mary Asante | HRi Director


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