How to Increase Prices Without Pissing Off Customers

The mountains look like they're on fire today. This time of year, the peaks near me burst into a brilliant display of yellow, orange, and red as the leaves change and prepare to fall for winter.

I live in Eastern Tennessee, home to one of the nation's most visited National Parks—the Great Smoky Mountains. From my home office, I can see the mountain tops, their autumnal beauty on full display.

As leaves change color, they're actually dying and preparing to drop from their trees. It's a defense mechanism against the cold, a way for trees to conserve energy. In essence, it's how trees adapt to changing conditions.

Just like trees, founders need to adapt to changing conditions. The ability to adapt is often what separates successful founders from unsuccessful ones.

One of the toughest adaptations can be adjusting pricing strategies. Industry trends might shift towards different pricing models, new competitors might enter the market, or economic conditions might change. These factors all demand a response.

Perhaps one of the most daunting tasks a founder faces is increasing prices without alienating customers.

Reactive Reasons for Pricing Increases

Sometimes, you're forced to adjust your prices. This is often due to external factors, though internal factors can also necessitate reactive price changes.

A common reason for price increases is rising production costs, whether due to general inflation or supplier price hikes or something else.

I've also witnessed price increases when new competitors enter the market or when existing competitors influence industry pricing. Typically, new competitors drive prices down as they offer discounts to gain market share. However, there are instances where they force prices up—for example, by creating higher demand, which allows suppliers to increase their prices, or by affecting input costs similarly.

Proactive Reasons for Increasing Prices

There are also times when you might choose to increase prices proactively.

For instance, carefully raising your prices can help test customer price elasticity. If you can increase prices by 10% but only lose 1% of customers, it could be worthwhile. This kind of experimentation can yield valuable insights.

Another reason might be to reduce demand. Why would you want to do that? Perhaps you have more orders than you can fulfill in your normal turnaround time. I've done this personally with my products and services. When my small team is overwhelmed with work, I'll increase prices. It's a lever I use to control workload.

Informed Decisions: Inputs into Pricing Increases

Various factors should influence any pricing decision.

Smart founders proactively increase prices when the data supports it.

So, what kind of data or information should you consider?

Here are some key factors I monitor to inform my decisions:

  • Demand - As mentioned earlier.
  • Competitors - Also discussed previously. The number of competitors matters too. In a saturated market with many options for customers, raising prices might be challenging.
  • Value Proposition - If your product offers superior quality or functionality, you can justify higher prices.
  • Timing - Some products are seasonal. For example, winter coats command higher prices in fall and winter than in spring and summer.

Depending on your industry, you may need to consider additional factors.

Easing the Transition: Ways to Reduce Customer Friction

The inspiration for this post came from a question I answered on X/Twitter.

A contact of mine, running a small business, was grappling with the decision to increase prices and how to communicate this change to customers.

These potential approaches could help:

  • Be transparent - Customers don't want to hear a "woe is me" story about why you're raising prices. However, the right customers will appreciate honest reasoning.
  • Consider calling your top customers - If certain customers represent a significant portion of your revenue, consider explaining the situation to them directly.
  • Provide incentives for loyalty - You might offer a short-term discount on the new pricing or a discount for customers willing to commit to an annual renewal before the increase.
  • Mass emailing - At minimum, give all customers advance notice of price changes. Don't let them discover the increase at renewal time.
  • Grandfathering - In some cases, you might keep current pricing for existing customers. Just be sure to calculate the financial impact, as this could significantly affect your margins.
  • Segment increases - Some industries allow for increasing prices for specific customer segments, rolling out price increases in phases. This aligns with the experimentation approach. Monitor churn carefully. One potential benefit of segmented increases is that some customers might be pleased with the changes, especially if they received more value, and might express this publicly.

Ultimately, it's likely that some customers will be unhappy with any price increase. Ideally, these are customers who weren't ideal fits anyway—perhaps they complained frequently or weren't in your target market.


What I'm consuming

I've said it before, and I'll say it again:

I love to write.

In fact, sometimes I write pieces that I never share.

Recently, I published my newest book, "Stress-Free Finances" on Amazon. You can find it here.

Speaking of books and writing, I'm currently reading "Very Good Copy" by Eddie Shleyner.

What I love about this book is that Shleyner's copywriting lessons aren't presented in a dry, textbook format. Instead, he shares them through personal stories. Plus, they're bite-sized—typically less than 500 words each. I even tweeted about how much I'm enjoying it.


If you’ve found this information helpful, I hope you’ll do two things for me.

1) Subscribe to this newsletter. That way, new copies are delivered directly to your inbox.

2) Share this newsletter with one other person that you think might benefit from the information I share.

Thank you for subscribing!
Please check your inbox for a link to confirm your email address.

Read past issues

Nov 03
How to Increase Prices Without Pissing Off Customers
Oct 27
Atomic Habits (James Clear) - Book Notes & Summary
Oct 20
How much should you invest - the Goldilocks Rule
Oct 13
From Idea to Bookshelf: How to Self Publish Your Next Book
Oct 06
Your value proposition sucks
Oct 02
Rich Dad Poor Dad (Robert Kiyosaki) - Book Notes & Summary
Sep 29
4 Skills that will Drastically change your life
Aug 03
Die With Zero (Bill Perkins) - Book Notes & Summary
Jul 28
Afraid of giving away too much equity to investors? Here’s the fix.
Jul 14
"Known (Mark W. Schaefer) - Book Summary and Notes"
Jul 06
The surprisingly simple purpose of a seed round of funding
Jun 29
When it's an easy decision to pass on startup funding
Jun 15
Go-to-Market Made Easy: Your Roadmap to Customer Acquisition
May 24
Planning for a Second Act + a sabbatical
May 05
This isn't 2008. But, it's not that much better
Apr 20
Market Whisperer: Knowing Your Customer Better Than Investors
Apr 14
Energized > Rested
Apr 07
Numb the pain, silence the teacher
Mar 31
The Myth of the Big Exit
Mar 23
Growth Gears: Equity vs. Debt - Fueling a Startup’s Journey
Mar 16
A candid conversation about fear
Mar 09
The Technical Product Managers Guide to Go-to-Market
Mar 03
My goal was 100 financial plans. I did 10x that goal.
Feb 25
Poor MVP, no one likes you
Feb 24
Beyond Bytes: Why Interpersonal Skills are the New Power Tools for Success
Feb 17
This one question changed how I looked at contingency plans
Feb 10
From $100k -> $75M - this week's fundraising lessons
Jan 27
The next big finance opportunity
Jan 20
This is how long a startup funding round lasts
Jan 09
How I'd market a loan broker business
Jan 02
25+ years of finance experience in less than 5 minutes
Dec 28
How to have a stress-free relationship with money
Dec 17
How to buy a business with little money down
Dec 12
Want to 10x your business? Try the strategy that most people fear.
Dec 05
Why being loan-specific as a loan broker is best
Nov 28
The Power of Micro Markets
Nov 19
Defining success criteria helps remove analysis paralysis
Nov 12
Lessons from acquisitions
Nov 07
My business plan cheat code
Oct 28
Everyone is missing the real point about being overworked
Oct 22
Why you should have a "How to work with me" manual
Oct 18
Selling eggs - my quiet ambition
Oct 13
Breaking Free from 'Meh': The Hidden Impact of a 7 Rating in Life
Sep 24
From Software Engineer to Commercial Loan Broker
Sep 23
A personal message about the importance of your health
Sep 16
Is the SBA 8(a) program going away?
Aug 21
What is a search fund?
Aug 14
My guidelines for speaking engagements
Aug 07
The Ultimate Guide to Picking the Perfect Lender for Your Business
Aug 05
Built to sell - pricing strategies that work
Jul 22
My framework for building impervious value propositions
Jul 12
How to force tradeoff decisions
Jul 09
How I'd Start a Freelance Business Today
Jul 05
The Bookends of Product Management
Jun 28
From the C-suite to Product; How I got here and what you can learn from that
Jun 17
My Digital Detox Experience
Jun 10
AI copywriters wrote this blog post
Jun 03
The SBA Just Made Business Acquisitions Easier
May 27
The power of index investing funds
May 20
The most important skill for entrepreneurs
May 06
I churned out 46,000 words in 90 days using this writing process
Apr 29
⏰ NOW is the time to turn your finance career into entrepreneurship!
Apr 22
How to build your own financial plan in under 1 hour
Apr 15
Define your audience first, then design your product
Apr 08
Getting a business loan just got harder
Mar 25
This one question is jet fuel for productivity
Mar 24
Are the rate hikes over?
Mar 18
This tool removes decision fatigue
Mar 11
The one stat keeping us out of a recession
Mar 05
One key reason raising startup funding is so hard right now
Mar 04
My framework for quickly launching profitable products
Feb 16
What’s the average business loan interest rates?
Feb 13
Everything you need to know about business loan rates
Feb 10
This one tool made me a better entrepreneur
Jan 25
This one-pager is perfect for brainstorming business ideas
Jan 18
Stop making this mistake with your startup’s target market
Jan 11
Powerful tools for researching competitors
Jan 08
User persona template demo
Jan 04
They should take my Marketing degree away
Jan 01
How to confidently charge your worth
Oct 02
Building wealth with Restricted Stock Units (RSUs)
Sep 11
What I’ve learned as a startup analyst for an angel investing syndicate
Jun 24
My favorite economic analysis tools
May 29
Which SBA Loan Has the Lowest Down Payment?
May 01
The Power of a Decision Matrix
Apr 24
Things to consider when buying a business
Apr 17
Buy a Business vs. Start One
Mar 31
How do Micro SBA Loans work?
Mar 03
Common Investor Term Sheet Components
Feb 15
3 Step Process for Generating Business Ideas
Feb 06
Thoughts on <my first Angel Investment>
Jan 11
Lessons from writing over 1,000 words per day
Jan 06
There Are Two Main Types of Business Plans
Dec 09
The Best Pitch Deck Templates