Best practices for communicating a price change

In 2011, Netflix decided to change their monthly pricing for DVD rentals and unlimited on-demand streaming from $10 to $15.98, or $7.99 for either DVD rentals or streaming. The price change was scheduled to go live in September, but within four months Netflix lost 800,000 subscribers and 77% of their stock price.

The price change would make streaming-only cheaper and discourage DVD rentals, which would reduce logistics costs for physical goods transportation, and eliminate lost or damaged DVD issues.

Today, Netflix customers are (for the most part) happily full-streaming. Netflix raised prices again in October 2023, and in the months prior added 8.76 million new subscribers for a total global audience of 247.15 million. Their decision to shift to streaming was wholly sound.

So how did their first announcement meet with so much disaster? Lack of transparency and communication. The then-CEO of Netflix, Reed Hastings, publicly announced “I messed up. I owe you an explanation.”

It turns out, there was more to the story that they didn’t share. Netflix planned to split out their DVD rental arm to a new company called Qwikster, allowing Netflix to focus on streaming.

With streaming being the future of entertainment (as we have all well seen), the explanation doesn’t change the price hikes, but it helped add insight into the reasoning behind the decision. It gave customers a vision of the future—inviting subscribers to join in rather than springing a price change on them.

More recently, Wendy’s announced dynamic pricing, wherein prices would change throughout the day based on time and demand. In the initial announcement, they failed to mention that the dynamic pricing would only lower prices when possible, which should have been the main headline. Instead, the announcement was met with backlash online, and had to quickly retract and correct their initial communications.

In this article, we will share how to avoid a debacle – from Netflix in 2011 to Wendy’s in 2024 – with good and effective price change communication. Read on to learn how to communicate pricing updates, and which channels to share on.

How to communicate a price change

Let's begin with messaging. There are a few key pieces of information you always want to include with your full pricing change announcement, whether in a blog, help desk article, or email.

1. Start with your reasoning

To start, you need to adequately explain your reasons behind the price increase, and justify the changes in a way that resonates with your customer base.

In the Netflix example above, their reasoning could have been that streaming is the future of entertainment, and their goal is to make streaming cheaper for their audience while simultaneously reducing the waste and expense that come with physical DVDs.

Another common reason for price increases is inflation. You could explain to your customers that you simply cannot afford to stay in business at your current pricing, and you’re increasing prices in line with the rising costs of doing business. Your loyal fans should be happy to pay more if that means their favorite brands or services can stay operational.

Google updated their Google Cloud infrastructure pricing in two parts in October 2022 (for new products) and April 2023 (for existing products). In the example below, Google explains that their pricing changes reflect the capabilities and upgrades they have added over the years. They also mention that their new pricing better reflects customer feedback and preferences for how they want to purchase Google services.

2. Outline different options that current customers have

Many pricing updates come with different options and timings. For example, you might update your standard plan pricing earlier than your enterprise plan. If this is the case with your pricing change, expand on the different options that your customers have.

You could offer legacy pricing for customers on a certain tier for the next few years, or you could grandfather in current pricing for customers who purchase an annual plan before new pricing comes into effect.

There are plenty of ways to ease customers into your new pricing structure, and it’s important to communicate their options for an easy transition.

In the example below, MailChimp explains their legacy plans in detail with different options, restraints, and more on their website. 

3. Make the changes easy to understand

You can’t—and shouldn’t—confuse your customers into new pricing. The goal of your communications, particularly around pricing, should always be to inform.

Considering today’s short attention spans, that means you need to make your pricing changes clear and easy to understand even for those who will only glance at your email, blog, or other notice.

Some ideas here are to use bullet points to break down changes and information, boldface the most important changes, and start with a summary explanation of how your pricing is changing.

In the example below, Google breaks down different pricing changes with bullet points under subheadings, making it easy for users to find and understand the information relevant to them.

4. Reinforce the value of your product or service

Remind your customers why they chose your brand in the first place. Perhaps you offer something that your competitors don’t, or you’re the best in the industry. Anchor your price increase announcement with a highlight reel of how your product or service has made customers’ lives better.

Where relevant, you may also consider connecting price increases to even better service down the road. For example, if you are an online assessment provider that will move from flat rate pricing to charging per test, you might mention that usage pricing helps ensure fast service for everyone involved, instead of a few users throttling the service and everyone experiencing slower results as a consequence.

In the example below, Google makes it clear that their new pricing will come with added flexibility for customers while reminding users of other benefits from the service (such as cross-region replication).

5. Provide all the details

Give your customers all the details upfront—don’t make anyone dig to find key information. Explain timings and when changes will take place, how different pricing tiers will be affected, what your new pricing structure is, and where to learn more.

In the example below, Payoneer does a great job of showing all of the details around a pricing increase succinctly. They have a table that shows affected country payments, updated fees, and when the changes will go into effect.

6. End with contact information

Finally, you want to wrap up with a way to get in touch if your customers have any further questions. Share a few ways to contact customer support, encourage them to reach out to their account managers, or if you’re sending information in an email let them respond with questions.

In the example below, Spotify announced that their pricing would change, and subscribers could expect an email with further details. They wrap up their announcement by directing readers to the FAQ page for more information.

Where to communicate a price change

Now that we’ve gone over what to include in your new pricing announcement, let’s discuss different communication channels to leverage for your message.

Your blog

Your blog should contain the most complete, story-based source of information about the pricing change.

This is where you can detail the journey that led you to where you are today, how the costs of doing business have changed, your product roadmap and growth, reasoning and justification for pricing increases, and your vision for the future.

Ultimately, this is where you want to cultivate understanding from your customers. It’s your chance to explain your side.

When Microsoft announced new pricing changes on their blog in 2021, they were sure to include:

• The fact that this was the first price change in a decade
• Highlights in innovation and how they’ve evolved over that decade
• Added value alongside the price change (unlimited dial-in capabilities for Microsoft Teams meetings)
• Details of their new pricing

Your help center

Your help center article should be the most detailed technical source of information about your pricing change. This is where you can get into the logistics, different tiers, and how everything will work.

In the example below, Zapier explains exactly what’s included in different plans and how tasks and tables are changing. The help center article also includes a section helping customers understand how the change will affect their existing tables.

A dedicated customer email

After building out your messaging and ironing out the details of your pricing change, send a direct customer email straight to the affected users. This is an effective way to alert your users to the changes right in their inbox, whether or not they subscribe to your newsletter, log into the app, or check your blog.

Include important highlights with a link to your blog or help center article to learn more.

In the example from Payoneer below, they start a pricing increase email with a succinct update of the most important information, followed by an explanation of why the changes are needed. They also include a section on what pricing changes mean for their customers, whether any action is needed, and where to learn more.

New pricing announcement email template

Not sure where to start? You can use our template below to announce a price change via email. Edit and adjust to your situation, for example by adding in a legacy pricing option or mentioning specific benefits from using your product or service.

Subject: Pricing updates to your <Company> account

Dear <Customer>,

We wanted to take a moment to inform you of some changes to our pricing structure.

As a company, we are constantly striving to provide high-quality <your product or service> at competitive prices. After careful consideration and market analysis, we have decided to make some adjustments to our pricing.

These changes will allow us to continue offering top-notch <your product or service> while also keeping up with the rising costs of production.

We understand that price changes can be frustrating, but we want to assure you that we have done our best to keep the increases to a minimum. We believe that these changes will benefit both our company and our customers in the long run.

We value your business and want to be transparent about these changes. Our new pricing will go into effect on <date>, so please take this opportunity to review your plan and usage before then.

If you have any questions or concerns, please don't hesitate to reach out to our customer service team. We are here to assist you in any way we can.

Thank you for your continued support and understanding.

Sincerely,

<Company>

Your newsletter

Put a short note about your pricing changes in your general newsletter, with a link to learn more going to your blog. Although not as critical as the dedicated customer email, this helps to get the word out and could affect the purchase decision of anyone who signed up for your newsletter to consider your product.

In the example below, HubSpot folds in new pricing updates to an email containing plenty of general updates, announcements, community programs, and a request for feedback. They keep their pricing information to one paragraph while adding a link to learn more at the end.

In-app

Your in-app notification around pricing updates should contain short, punchy copy that ensures your active users know changes are coming. These notifications are a great way to ensure customers who regularly use your product are informed well in advance.

Your in-app notification should have

• An eye-catching headline
• Quick details
• Punchy justification
• A linked CTA to learn more

In the example below, Upwork lets their customers know that they’re increasing one of their fees, when to expect it, and how it’ll take effect. They also include a link to learn more about the fee in question.

In-app pricing change template

You can use the template below to start building out your in-app pricing change notification. Tailor it depending on whether you’re raising prices across the board, adjusting your tier offerings, or adding a new fee.

If you can, you should also tailor what information each user sees based on their plan.

Headline: Your pricing is changing

Starting on <date>, pricing for our standard plan will increase from <old price> to <new price> to better accommodate a growing suite of tools and features that fuel your success.

[Learn More]

Social media

Social media announcements should be quick and personable. This is your chance to explain your decision in a way that resonates with the masses. When posting on social media, share the highlights, your justification, and where to learn more.

In the example below, Rebuy Engine’s leadership team announced pricing changes, their reasoning, and what those changes are.

Customer-facing teams

All of your customer-facing teams should be briefed about the pricing updates and who they will affect. Teams that interact with customers directly should be proactive in communicating any upcoming changes.

If you have enterprise accounts, your account managers should reach out personally to explain how pricing is going to change and what options your customers have.

Be sure to clarify per customer or tier:

• What the old pricing structure was
• The new pricing they will fall under
• A timeline of when changes will take place
• The benefits of the new pricing
• Any legacy options or grandfathered plans

Pricing update checklist

To make things easy, here’s a quick checklist to ensure you’ve covered all of your communication channels.

• Publish a blog with all of the details
• Create relevant help center articles with the technical details
• Send out an email to your customer base
• Include the announcement in your general newsletter
• Create an in-app notification that requires acknowledgment before closing
• Announce your reasoning on social media channels
• Have your account managers reach out to their accounts
• Brief your customer support teams on what to expect

Wrapping up — Help customers see your new pricing as an enabler, rather than a deterrent

You’ve built a product or service that your customers happily pay for. Inflation and your current pricing shouldn’t restrict your company from moving toward a larger goal. Instead, pricing should act as a growth lever, and pricing changes are your opportunity to connect with customers and remind them of your value.

Keep your audience fully informed of price changes, and well in advance with early, frequent, and clear updates that realign value with your new pricing structure. Communicate your changes in a timely and mindful manner, across as many channels as you can to help facilitate a smooth pricing change.

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