How To Change Prices Without Losing Customer Loyalty

A guide on how to change prices without pissing off your users.

If you’re like me, you’ve probably received a handful of price increase notifications over the past few months. With high inflation and a market environment that has shifted to value margins over top-line growth, price increases seem to be all the rage. As I’m sure you can understand, your users don’t love when you raise prices on them, so it’s important to handle a pricing change with care.

In this article I’ll focus on how to execute a pricing structure change without losing user loyalty. I won’t get into the strategy behind how to make informed pricing decisions in this post, but if you want to learn more about that my good friend and colleague Sam Bauman wrote an excellent piece on it that you can read here.

Let’s set the stage

Before embarking on your price-change journey, there are two truths you should understand:

  1. Your users are humans. If you do right by them and treat them with respect they won’t lose loyalty to you for changing your prices.
  2. You won’t be able to please everyone. Obviously try your best to do right by all your users, but there will always be someone that is unhappy.

Keep these in mind as you strategize around your pricing change. Now that we’ve got that out of the way, I’ll walk through nine pillars of how to approach price changes.

How to approach pricing changes

  1. Align internally. When doing a price change, your company needs to present a unified front. Your PR team, marketing team, customer service team, etc. all need to be singing the same song. Your customer service team needs to be prepped with full details and (human) language as well; you don’t want any improv in this scenario. All company-to-user touch points should be clear, concise, and consistent.
  2. Increase brand media spend ~8 weeks ahead of time. This helps to increase the value for the money perception of your brand which in turn helps reduce cancellations when the price change announcement comes out.
  3. Give your users a heads up. If you are increasing prices, It’s important that you give existing users adequate warning before they get their next bill. I recommend a minimum of 30 day notice before they receive a higher bill. Additionally, taking the time to segment your user base and craft the right message to the right user to notify them about the price increases can have a meaningful impact on how your price change message is received.
  4. Make sure your users know how much they will be paying. This seems intuitive, but price changes can be confusing. When communicating a price increase to users, it’s best to tell each user what their next bill date is and how much they will be billed so there isn’t any confusion. Strava recently moved a little too quickly on price increases which led to swaths of users being confused and a scathing article from tech blogger DC Rainmaker.
  5. Give a meaningful explanation to your users. You work hard to build products your users love and you should be proud of that. It’s okay to explain that you need to charge a little more to keep bringing that same level of value to them. Giving users the “why” helps them empathize with you.
  6. Choose your timing intentionally. Take a look at your distribution of future customer bills. Ideally you raise prices at a point where you have the fewest number of soon-to-arrive customer bills as possible.
  7. Reaffirm that you’re working to make the product the best it can be. Thank them for being users and remind them that you’re continuing to work hard to bring them an experience they love.
  8. Do right by your users. Think critically about the price change experience from your users perspective. How can you soften the blow? For example, if you decrease your prices, what do you do about the users that bought a few days before? Doing some type of “make good” offer for that cohort goes a long way from a user loyalty perspective.

Price changes are a delicate game regardless of whether your price is moving up or down. Strava and Gumroad recently caught backlash on their price increases, Tesla also caught flack for the way they handled their price decreases. It’s important to take the time to think through the different user experiences regarding the pricing change and to approach them thoughtfully.