Mike Andes raised prices 27% due to labor and insurance costs. His email offered a temporary freeze for customers in hardship, resulting in minimal churn and retained goodwill. He shares the exact script and approach other business owners can use.
When you do price increases, do it humanely. If it's going to cause financial hardship for someone, extend the date if needed. This goes back to when I raised prices at one of my locations by 27% across the board. We had been in profit mode for a couple of years and we were doing good, but I started noticing that we had— we went from like 27% profit to 24% profit. Now we're like 18%, 19% profit for the year. We're raising prices across the board by 27%. A blind price increase. Meaning every single customer, I don't care about the numbers, I'm just doing it across the board. And we just sent an email out. And what I changed back then that I'm so happy that now I do anytime I'm doing price increases, and I highly recommend you do when you raise your price, take the edge off the price increase. No one likes a price increase. As an owner, I don't want to raise prices. I also need to have a sustainable business that can continue to serve my customers. And so I must raise my prices, but I'm gonna do it in a humane way. I'm not just going to say, hey, price is this, peace out. I'm going to do it in a way where I explain why I need to raise these prices. Trust me, when I raised prices 27%, our wages had gone up like 40%. And so I had no problem. And our insurance had more than doubled the 12 months before when we renewed on all of our trucks and our general liability. So I was like, I have no problem. We need to do this. Now, when I raised the price by 27%, only a handful of people left, but no one blew up. No one freaked out, calling us names, calling me greedy, nothing. And I pared it down to the one thing that actually changed in that price increase email. And as the very end of the email, I simply said, hey, like in the email, I say, hey, this is the price. It's going to this price starting this day. If you have any questions, please let us know. Here's why the price is going up. But at the very end, I had a couple sentences that really helped and it made it much more of a humane way of increasing the prices by showing that we actually were empathetic to the fact that We don't want you to have to raise prices. And the fact is, we know that people are getting price increase on a lot of different services. And so what we say is, hey, if this price increase is going to cause undue financial hardship for you and your family, please reach out to us. And so we didn't say, oh, we're going to stop. We didn't make any promises. We said, if this is actually going to affect you really negatively financially. And when we raised the prices, it was close to Christmas. And so I'm like, look, if this is going to cause a problem, especially during the holidays, like, Please reach out. And we did have a few people reach out. And what did we do? We extended their existing price for another 3 months to get them through the holidays. But by having the humane approach of saying, hey, if this is actually going to cause financial hardship for you and your family, please reach out. It just humanized me immediately. And for the few people that did, we extended their price, their existing price by 3 to 4 months. And what's crazy is none of those people left at the end of 3 or 4 months because now they saw us as someone who was reasonable and could understand that raising prices quickly could have an adverse effect on their finances.
