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How to Raise Prices Without Losing Customers

Why is it that Netflix can announce a slight price increase and the majority of people shrug it away but if the  price of a loaf of bread goes up, the masses are ready to riot in the streets?  It may have to do with value and perceived value.  One thing is for sure, you always risk losing customer’s business and trust with even a slight price increase.

One of the most challenging task companies face on a regular basis is to hold their old customers when they increase the price of their products. With the increase in market conditions, price inflation and world economic factors there is a requirement to also enhance the price of products and services. However,this is not an easy task.

There are ample risks involved. Because there are chances that the moment prices are increased existing consumers will lose their loyalty for the product and look for cheaper alternatives.  As a result,the product can lose a lot of revenue.

Explanation For Price Hike

If the scenario of the market is such that there is no option but to increase price, then one requires increasing it.  For example there can be a situation where the product supplier has increased its prices roughly 10% in the last year. Then you cannot avoid but increase the prices at least by 5%.  An explanation can be given to the client base that the product price has been partially increased and not completely and this can help retain your customers.

“It Could Always be Worse” Comparison

In situations where your competitors have all increased their prices it is important to disclose this information to the user base.  A comparison in between the price increase of competitive product and your product will help them understand the actual potential of your product.

Sometimes, your customers will do this for you.  Netflix has announced price increases several times during the past 5 years.  Many took to social media to voice their opinions.  Although there was no lack of complaints, many customers compared the price of Netflix to the price of cable television which is much more expensive.

Another way for a comparison approach to work is to allow some customers to keep using your product or service for the same price, but remove a feature or option.  To use Netflix again, in 2016 they announced a price increase from $7.99 to $9.99.  Customers who wanted to continue to enjoy Netflix as is will now pay $9.99.  However, if some customers did not want to pay that price, they could still have full access to the site for $7.99 but would not be able to view in HD or view in multiple screens.

This type of comparison will allow customers to see the difference in service and they can then decide if it is worth paying the extra 2 bucks to watch House of Cards in HD.  By the way, it is.

“However, it is possible to increase prices without adding an entirely new service to your arsenal.  Instead, deliver an enhanced result.”

Value Addition

The best way you can retain old users and increase price is to add something to the product to increase its worth.  A sweet deal as it is commonly termed in the business world, this makes sure your consumers remain bonded to your product even if a price change has occurred.

It’s very important that the value that you are adding is worth it to the customer.  Adding a feature that isn’t valuable to the customer will just backfire on you.  Rule of thumb is to not charge for cosmetic changes.  If you produce an all natural line of iced teas, enhancing label designs, for example, is not a good reason to charge customers.  But adding pomegranate or acai juice to your tea may be a good reason for customers to pay more.

This is going to be tougher for those of you in the service industry.  Adding a service means more time you must spend.  However, it is possible to increase prices without adding an entirely new service to your arsenal.  Instead, deliver an enhanced result.  If you own a digital marketing company, instead of branching out to offline marketing, deliver more exposure for your customers through different social media networks and blogs.

Quantity Transformations

Another trick is to transform quantity. Here one is recommended to offer a big quantity product at lesser price point.  The customers will obviously look out for products with high quantity.  For example, a customer usually purchases a 4 bottle beverage at a particular price.  Now, since the overall price has been enhanced you compel the customer to buy a 6 pack sealed beverage set at a good price.  Hence, cost is reduced but profit is maintained.


A premium or a freemium product is that one which involves price repositioning. Here, customers are recommended to buy an alternative product which costs more but is so attractive that the customers are not lost.  For a premium high priced product, a free offer also helps keeping customers bonded with the brand.  Hence, the premium product helped you increase your price but the freemium addition kept the attraction quotient intact.

Dropbox is a good example of how to offer a freemium.  They allow you to use the software to backup and share files. I first used Dropbox when the photographer who took my wedding photos wanted us to review the photos.  I loved it.  But Dropbox’s free version allows you to only use 2GB of space.  That amount of space can be used pretty quickly.  The premium version is $9.99 which is affordable and valuable for those who use a lot of photos and video.

Choose the Perfect Time

Timing is the most crucial aspect in every business.  If the price of a product is increased at around a time when the year is coming to an end then it is taken as a natural step.  As a result, customers are not lost.  People do expect new things in a New Year and hence even if a product’s price is made higher at this time, people accept it naturally.  It is because they expect a new value being added to the existing product due to which its price has been increased.

Slow launch

The basic idea is not to rush at all when it comes to price inflation.  Prices of products or services must be enhanced gradually and not all of a sudden.  A small and exponential growth in price point will not cause adverse effect to your product. It will not lose old customers rapidly.  A sudden price hike can cause negative effect to your entire user base at one go thus creating huge amount of loss of money, customer and reputation.

The Free Trial Approach

The last way to do this task is to undergo a trial and error method.  But here’s a warning; no matter how much you plan, there still remains a risk of losing a few customers on the eve of a price hike.  Hence, it doesn’t do much good to worry about it. If the requirement of the price enhancement is such that it is absolutely mandatory then you must moderately increase it.

A little shift in price will not affect the business adversely.  To conclude, you must understand market conditions and the activities of your competitors in order to take strategic decisions about price inflations.  Feedback from your own customers can also help you gain priceless insight about your product and its price point.

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Lance McHenry on Twitter
Lance McHenry
Staff News Writer: Lance McHenry is a writer, tea snob, entrepreneur, lover of #tech and #startups. His idea of triathlon is developing an idea, creating a prototype, and validating. He has been involved in the growth of several startups and now shares his ideas on business and tech. Follow him on Twitter @Lanceexpress

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Staff News Writer: Lance McHenry is a writer, tea snob, entrepreneur, lover of #tech and #startups. His idea of triathlon is developing an idea, creating a prototype, and validating. He has been involved in the growth of several startups and now shares his ideas on business and tech. Follow him on Twitter @Lanceexpress


  • Pingback: 10 Tips To Raise Your Salon Prices Without Losing Clients | Phorest Blog

  • Great post. Thanks. However, I would recommend being careful your value addition doesn’t eat into your incremental profit from the price increase.

    Ray Dennis July 12, 2016 8:53 pm Reply
  • Hi,

    Well thought out post. Nicely written as well. I’ve seen different businesses use each of the tactics you listed – and, each of them can work to raise prices and keep customers from jumping to your competitors. I’ve also seen businesses use hybrid’s, i.e. combinations of 2 or more version. Good post. Thank you,

    Edward Thorpe February 22, 2016 12:17 am Reply
    • Good point! Sometimes multiple strategies are put into play to help sweeten the deal for customers.

      Staff February 22, 2016 9:36 am Reply
  • Nice!

    Teddysstartup February 16, 2016 12:44 pm Reply

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