With the cost of parts, labor, energy bills and more continuing to rise, a price increase for most field service businesses isn’t a choice; it’s an inevitability.
For those businesses who want to thrive, it means figuring out how to balance offering a fair price to your customers whilst maintaining profitability…
It’s a challenge, but today, we’re exploring how you can communicate price increases to your customers.
While we have other content discussing how to go about calculating how much you should be charging, it’s another thing to effectively communicate those changes to your customers.
You don’t want to appear cold or to scare customers away by being too direct, but you also can’t avoid highlighting that a service or maintenance fee has to increase.
Transparency is the most important thing to remember when it comes to communicating a price increase, but to help you write a professional letter, you’ll also need to consider how to:
- Find the right words
- Provide detail, without being overwhelming
- Manage a communication timeline
- Handle potential backlash
Let’s dive in:
Understanding Why Costs are Increasing
Before we explain “how” to write a price increase letter, it’s worth looking at “why” prices are going up.
We’ll be brief, but it’s a helpful context to understand the situation and can be useful to share with your customers, too.
Providing context isn’t about making excuses—it’s about helping your customers understand that a price adjustment is a calculated decision, meaning you can maintain the quality of service they rely on and expect from your business.
Whether you’re installing a standby generator or performing routine electrical maintenance, three main factors are likely squeezing your business right now:
- Supply Chain Volatility: The cost of raw materials—specifically copper, steel, and specialized engine components—has moved significantly.
- The Talent Gap: The cost of hiring and retaining skilled, certified technicians has risen as the demand for specialized labor hits an all-time high.
- Operating Overheads: From fuel for service trucks to the rising cost of business insurance, it simply costs more to get a qualified pro to a customer’s front door than it did twelve months ago.
These factors aren’t just headlines; they are real-world pressures eating into your margins. However, similar economic factors are also impacting your clients. Your customers are seeing price increases at the grocery store, the gas pump, and on household bills.
The challenge isn’t explaining that prices are up—everyone knows they are.
The challenge is communicating why your service remains a vital investment, and how you are working to mitigate the impact on their wallet.
Let’s take a look at how this (and other information) plays a role in writing a price increase letter:
Why Transparency is Your Best Tool
Sneaking an increase onto an invoice is the fastest way to lose trust. A surprise increase can cause a lot of frustration or even lead to dispute.
Put yourself in your customers shoes: you’ll have experienced price increases before—perhaps for a subscription or an energy bill—and in these cases, it’s highly likely you’ll have received an email explaining that prices are going up before they actually do rise.
While the cost might only be a few dollars, sometimes it can be significantly more, but either way, a heads up is what matters to you as a customer. Especially if it gives you the “what, why, how, when” of a price increase.
With a transparent message, you can see:
- What’s happening (a price increase)
- Why it’s occurring (i.e. an increase in operating costs)
- How much is it going up by (a clear cash amount is stated)
- When it’s happening (perhaps next month, or next quarter)
This information is the company attempting to be transparent with you.
When information is explained clearly, customers are more likely to be accepting or even forgiving of a price increase.
Note: transparency doesn’t mean telling the customer everything. As we said, context is useful, but too much information can also mean that what’s important gets lost.
As we’ll see in the example below, it’s important to keep things simple. Besides, customers may have follow-up questions and you can always give more context later.
How to Frame the Change: Value Over Cost
Communicating the value of a service is paramount: no matter the price.
If customers feel the service you’re providing has value, then they’re more likely to stomach a higher price. Of course, you still need to say what you’re charging, but focus on what choosing your business means as a result.
As mentioned, a bad way to frame a price increase is to be blunt in your messaging:
“Our fuel costs are up, so we’re charging more.“
A better option is to say what makes your service stand out. Perhaps customers know you for your incredible customer service. Talk about that. For example:
“To ensure we can maintain our 24/7 emergency response times and deliver the service you deserve, we are adjusting our rates.“
Reliability has a price and people understand that, especially if you’re communicating price increases to loyal customers who genuinely value your services.
What to Include in a Price Increase Letter
Structuring a price increase letter should be straightforward. We recommend four essential “Blocks” that every letter must have:
- Show gratitude
- Say what & when
- Explain why (briefly)
- Go over next steps
Show Gratitude:
Thank them for their loyalty first.
Say What and When:
Explain what is changing, and when it takes effect? i.e. give 30 days’ notice.
Explain Why (briefly):
Briefly mention the investment in quality/parts/training to continue delivering the service they know and love.
Go over the Next Steps
Make it easy for them. Explain how it may affect future quotes or existing service contracts.
Here’s an example of how these sections come together:
Subject: An update regarding our service fees at [Your Business Name]
Dear [Customer Name],
We are writing to thank you for trusting [Your Business Name] with your service needs over the past year. We truly value your business and the trust you’ve placed in our services.
To ensure we can continue providing the high level of expertise, safety, and reliability you expect from us, we are adjusting our service rates, effective [Date].
What this means for you:
Starting [Date], our [Specific Service] rate will move from [Old Price] to [New Price].
This adjustment allows us to continue investing in the latest tools and ongoing training for our technicians, ensuring your service can continue smoothly. Any projects currently quoted or scheduled before [Date] will be honored at the previous rate.
We appreciate price increases can be concerning, but are doing out best to mitigate the rising costs affecting us all in today’s economic climate, but we’re determined to maintain the quality of service you deserve!
Thank you for your understanding and we look forward to serving you in the year ahead. Please contact us should you have any questions.
Best regards,
[Your Name]
[Your Business Name]
Customers don’t need to know your prices are going up because there’s been a 20% spike in copper, which increases the cost of wiring, all because of new tariffs… that’s too specific and can feel like you’re making excuses.
Instead, focus on them, the service you’re delivering, and your eagerness to keep service their needs.
How to Rollout a Price Increase
Never leave a price increase letter until the last minute.
You want to give time for customers to digest the information and allow them to ask questions so that they can better understand or plan around the situation.
The last thing you want is for them to feel as though you’ve trapped them with a price increase they can’t get out of, especially if an increase is looking to prove costly.
Timing is everything and the more time people have, the better they can budget and manage their finances.
It might also be the case that not every service you provide needs to go up in price. If that’s true, then make it clear to customers. It can be encouraging for them to see not everything is going up in price and build positive sentiment.
A pro-tip for field services: As you can see in the example above, it’s a good idea to honor quotes made before the announcement. It builds immense goodwill and a time limit also protects you, should a customer inquire at a later date and time.
You might also consider using a price increase as a way to nudge wary customers along, perhaps even adopting a recurring service contract at a cheaper price. Annual contracts can benefit both parties, giving consumers peace of mind and securing recurring revenue for your business.
How to Handle Customer Backlash
No one likes a price increase, but handled well, you shouldn’t get too many complaints. Of course, you’ll get some and it’s important to be prepared to respond appropriately.
In a similar way to creating a price increase template, it helps to have canned responses your team can refer to so that they can reply promptly, without muddying the waters.
These responses can be useful for both emails and phone calls, should a customer decide to reach out directly.
In you reply, it’s important to sympathise with a customer, but be firm.
We recommend focusing again on discussing the value of your services and, should it be required, offering some of the reasons mentioned above as to why you’re having to increase your prices.
Responses like this should work well for you:
“We understand that a price increase is concerning, and while we can’t lower our rates, we can guarantee that our work is backed by [X] years of experience and a [Y] warranty. We promise to deliver the service you expect from us and are doing all we can to manage price increases in a fair, sustainable way.”
We cover a similar topic in our blog on breaking bad news to a customer, so check it out for more advice.
Download Your Price Increase Letter Templates
At the end of the day, a price increase is inevitable, but it doesn’t have to spell doom and gloom for your business.
Most people know these are tough economic times, so trust that people will be reasonable and understanding, so long as circumstances are mad clear.
Of course, only you know your customers best, so depending on the relationship your team has with them, you’ll be in the best place to navigate difficult conversations and mitigate issues.
To help you out, we’ve created a variety of templates you can use to create your own price increase letters. Use them as email or letter templates to send to your customers.
Download your copy by clicking the banner below.
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