Founders & Small BusinessFree tool
Customer Price Increase Communication Plan
A plan for raising prices on existing customers: each group's increase, how many you can afford to lose, who gets an exception, and the emails.
Free to start · Opens in your River workspace, ready to edit and share
How to tell customers about a price increase
To tell customers about a price increase, send each one a short, direct notice before the change. A good one gives the new price in dollars, the date it starts, one honest reason and what stays the same. It arrives early enough to meet your agreements and any law that applies. The work that makes it land comes first: grouping customers, checking what each group can afford to lose, and deciding who gets an exception.
Settle the exceptions before anyone hears the news. Whatever you give the first customer who pushes back is what the next one will ask for.
Group your customers first
One increase for everyone is simple but treats very different customers alike. List each customer with what they pay a year, when they started and roughly what they cost to serve. Then sort them into three or four groups, such as these:
- Key accounts: your largest customers, the costliest to lose
- Core: steady customers paying current prices
- Recent: customers who signed in the last year at today's prices
- Legacy: long-time customers on old rates, often the most work to serve
Give each group its own increase and a one-line reason. Legacy customers may need a bigger correction, spread over two steps. Recent customers just agreed to today's price and may need nothing yet. Key accounts already paying close to today's rates need little. If you haven't settled the overall number, work it out first with a product pricing template.
Work out what you can afford to lose
Some customers will leave. To find how much revenue can go before you earn less than today, divide the increase by the increase plus your contribution margin, both as percentages of price.
OpenStax's managerial accounting textbook calls this the contribution margin ratio: the percentage of a unit's selling price that exceeds total unit variable costs1. For a service business, it is the share of a customer's fee left after the costs that would go away with them.
Revenue you can lose before the increase stops paying
| Contribution margin | 5% increase | 10% increase | 15% increase |
|---|---|---|---|
| 30% margin | 14.3% | 25.0% | 33.3% |
| 50% margin | 9.1% | 16.7% | 23.1% |
| 70% margin | 6.7% | 12.5% | 17.6% |
Increase divided by increase plus margin, assuming the customers who leave are typical.
The higher your margin, the more profit leaves with each customer, so the fewer you can lose. Run the sum for each group, too. A studio with $600,000 in yearly revenue, a 50% margin and a 10% increase can lose $100,000 of that revenue and still earn what it did before. One key account paying $90,000 would use up almost all of that cushion. Ten legacy clients paying $3,000 each would use less than a third.
Write the exception rule before the emails
Someone will ask to keep the old price. Decide now what earns an exception, so the answer doesn't depend on who calls or how upset they sound. A workable rule has four parts:
- A test anyone could check, such as five years as a customer and a healthy margin
- A dollar cap on the total you give back
- One person who decides, so every request gets the same answer
- An end date for each exception, after which the new price applies
Put a price on one exception per group, and the cap becomes a count. Say a year's exception for a key account gives up $5,400, and one for a legacy client gives up $600. A $6,000 cap then covers one key account or 10 legacy clients.
Write each exception as a dated discount off the new price, not as the old price kept. Daniel Kahneman, Jack Knetsch and Richard Thaler tested this framing in telephone surveys. A $200 car price increase seemed more unfair as a higher list price than as a smaller discount2, according to the Nobel committee's 2017 review of Thaler's work. When your discount ends, the customer loses a discount instead of facing a second increase.
Check how much notice you owe
For business customers, your agreements set the rules. Check each one for a notice period on price changes, whether prices can change mid-term or only at renewal, and how notice must be sent. A contract summary puts those terms and dates on one page. Date each customer's increase from their own terms; some may be months away.
Consumer subscriptions can carry legal rules too. California's automatic renewal law requires notice of a fee change no less than 7 days and no more than 30 days before it takes effect3, plus how to cancel. It covers California subscribers whose contracts were signed, changed or extended since July 1, 2025, even if they agreed to the change in advance.
Mind the 30-day ceiling: a letter sent 60 days ahead doesn't meet the rule on its own, so send the notice inside the window too.
When to call a lawyer
This guide isn't legal advice. If an agreement is unclear, you sell to consumers in several states, or your industry has its own pricing rules, have a lawyer check the notice first.
Write the price increase email
Call your largest customers a day or two before the email, so they hear it from you. Then send the emails, with the new price and date in the first two sentences. Each email covers five things:
- The new price in dollars and the date it takes effect
- One sentence on why, about your own costs
- What stays the same: the team, the service, the terms
- Any option you offer, such as a year upfront at today's rate
- Who to contact, and for consumer subscriptions, how to cancel
Give one reason, and make it the true one. When Kahneman, Knetsch and Thaler asked people about a hardware store raising snow shovels from $15 to $20 the morning after a snowstorm, 82% called it unfair2. Raising prices to cover higher input costs is typically acceptable, the committee's review adds. So name the costs that rose, and leave competitors' prices out of it.
Raise the price, not a fee
California's Attorney General notes that since July 1, 2024, it has been illegal for most businesses to list a price that leaves out required fees4 on sales to consumers.
Subject: Your monthly rate from March 1
Hi Dana, from March 1, 2027, your monthly retainer will be $2,860, up from $2,600. It's our first change in three years, and it covers higher wages and software costs.
Nothing else changes: the same team, the same response times and the same terms.
Happy to talk it through on a call this week. Thank you for six years of working with us.
- Number first. The price and the date come first, in dollars.
- One true reason. It names the costs that rose, in one sentence.
- What stays the same. It answers the worry before the client raises it.
Answer every reply with the same rule
Answer replies quickly, and from the exception rule. Log what you grant against the cap, and check in before the date with anyone who hasn't replied. A customer who threatens to leave gets a call, and the same answer as everyone else.
If a customer says a rival is cheaper, check the rival's published prices; a competitor analysis gathers them. Don't call the rival to compare notes, however friendly. The FTC lists present or future prices, pricing policies and discounts5 among the topics that may draw antitrust scrutiny when competitors discuss them.
Before you send the announcement
- Every customer is in a group with its own increase
- You know how much revenue each group can lose
- The exception rule has a test, a cap, a decider and an end date
- Each date meets the customer's notice terms and any law
- Key accounts hear the news by phone first
- The email gives the new price in dollars, the date and one reason
The tool at the top of this page groups your customers, runs these numbers and drafts the rule and the emails for you to edit.
How it works
Start with your customer list, even a rough one, and the increase you have in mind. River groups your customers by value, tenure and margin and gives each group its own increase. Then it counts how many customers each group can lose before the increase stops paying. It writes the exception rule before the emails, so the first customer who pushes back doesn't set your prices.
Everything lands in your workspace: a sheet with a row for each customer, plus a document with the plan, the emails for each group and a call list for your key accounts. If you don't track margin per customer, River estimates it from what you share, such as support load, and labels it as an estimate. Gaps are marked for you to confirm. River drafts the emails; you send them.
Share your customers
Paste your customer list and the increase you plan, with the notice your agreements require.
River runs the numbers
It groups customers, sets each group's increase and counts how many each group can afford to lose.
Get the plan
A sheet with every customer's new price and date, plus the exception rule and emails for each group.
Edit, then send
Change any number, ask River to rework one group's increase, then send the emails yourself.
What you get
- Your customers in about four groups by value, tenure and margin, each with its own increase
- How many customers each group can lose before the increase costs you more than it brings in
- A flat increase compared with the grouped plan, on revenue collected and revenue put at risk
- An exception rule with an objective test, a dollar cap, one decider and an end date
- A sheet with a row per customer: group, new price, when it starts, revenue at risk and priority
- Short emails for each group, answers to likely objections, and a call list for your key accounts
Common questions
How do you tell customers about a price increase?
Tell them directly and in writing, with at least the notice your contracts require. Lead with the new price and the date it takes effect, then give one honest reason and say what isn't changing. Call your largest customers before the email goes out, and decide in advance what you'll offer anyone who pushes back, so every reply gets the same answer.
How much notice should you give before raising prices?
At least what your agreements require, and enough for customers to budget, so read each contract's notice and renewal terms first. Some laws set a window too. In California, a consumer automatic renewal signed, changed or extended since July 1, 2025 needs notice of a fee change 7 to 30 days before it takes effect. Notice sent two months early doesn't satisfy that rule by itself.
Should you grandfather existing customers at their old price?
Usually not forever. An old price kept with no end date is a permanent discount, and it grows each time you raise prices again. If a long-time customer deserves help, give a set discount off the new price that ends on a named date. Let your exception rule decide who gets one, not who complains loudest.
How many customers can I afford to lose after a price increase?
Divide the increase by the increase plus your contribution margin. With a 6% increase and a 44% margin, you can lose 12% of revenue (6 divided by 50) and still make the same profit. Work it out for each group, because one large account can be worth more profit than a whole group of small ones.
Should I explain why prices are going up?
Yes, in one plain sentence about your own costs, if that is the real reason. In surveys by Daniel Kahneman, Jack Knetsch and Richard Thaler, people usually accepted increases that passed on higher costs but not ones that exploited a jump in demand. Skip the long apology and the state of the economy, and don't point to what competitors charge.
How do I plan a price increase with River?
Paste your customer list and the increase you have in mind into the box at the top of this page, with your notice terms if you know them. River groups your customers and works out what each group can afford to lose. It writes the plan, the exception rule and the emails into your free River workspace, where you can edit them.
Is the price increase communication plan free?
Yes, it is free to start. Your plan, customer sheet and emails open in a River workspace, where you can edit them, share them or ask River to change them. Paid plans add more AI use and access to the most advanced models.
Sources
OpenStax. “3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin.” openstax.org (opens in a new tab)
Royal Swedish Academy of Sciences. “Richard H. Thaler: Integrating Economics with Psychology.” nobelprize.org (opens in a new tab)
California Legislative Information. “California Code, BPC 17602.” leginfo.legislature.ca.gov (opens in a new tab)
California Attorney General. “SB 478 - Hidden Fees.” oag.ca.gov (opens in a new tab)
FTC. “Price Fixing.” ftc.gov (opens in a new tab)
Built by
Chandler Supple
Co-founder & CEO, River
Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.