The Price Increase Letter That Keeps Most of Your Clients

You haven't raised your rates in two years. Maybe three. Every time you think about it, you picture Mrs. Henderson, who's been a loyal client since you started. Or that property manager who sends you steady work. You tell yourself you'll do it next quarter.

Meanwhile, your costs keep climbing. Maybe your material costs are up 15-20%. Your insurance renewed at a double-digit increase. Your guys need raises or they're walking. But somehow, you're supposed to charge the same as 2022.

The Real Cost of Avoiding the Conversation

According to the Bureau of Labor Statistics inflation calculator, $100 in January 2022 has the same buying power as approximately $112 as of late 2024. That means if you charged $100 for a service call three years ago and still charge $100 now, you're effectively earning around $89 in real terms.

But here's what really kills contractors: it's not just that your revenue buys less. Your costs have gone up too. If you're running a typical 10-15% net profit margin and your costs rise 15% while your prices stay flat, you don't just lose 15% of your margin. You can lose your entire profit margin, or worse, start losing money on every job.

For a shop doing $500,000 a year with a 15% net margin, that's $75,000 in annual profit at risk. Not revenue. Profit. The money that was supposed to be your paycheck, your truck fund, your retirement.

Why This Feels So Hard

You built your business on relationships. You know your clients' names, their kids, their dogs. You've fixed their emergencies at 2 AM. Raising prices feels like betraying that trust.

But here's what's actually happening. You're subsidizing their service with your family's financial security. You're working harder for less. And eventually, something breaks. Usually your best technician leaving for a competitor who pays better.

The SBA's business finance guide covers the fundamentals of tracking costs, cash flow, and keeping your finances healthy. You can't serve customers if you're out of business. Just like having a clear employee theft policy protects your business from crisis, having a price increase system protects your margins from slow erosion.

The other fear is losing clients. But think about the clients who would leave over a 5-10% increase. Many of them were likely already price-shopping. They were already one Google search away from calling your competitor. You probably weren't going to keep them long-term anyway.

The Manual Fix: Your Price Increase Playbook

Here's a step-by-step process you can implement this month without any special tools.

Step 1: Calculate Your Actual Increase Needed

Before you write anything, know your number. Add up your cost increases over the past year:

• Material costs (check invoices from last year vs. now)
• Insurance premiums
• Fuel costs
• Labor costs (including what you should be paying)
• Any new compliance or licensing fees (these vary by state and trade)

Divide that total increase by your revenue. That's your minimum increase just to stay even. Add 3-5% for margin protection, and you have your target.

Step 2: Segment Your Client List

Not every client needs the same communication:

High-value recurring clients: Personal phone call or in-person conversation, followed by written confirmation.

Regular clients: Personalized email or letter with 30-day notice.

Occasional clients (not under contract): Updated pricing on your next proposal or invoice, no formal announcement needed. If you have a contract that requires written notice, follow those terms.

Step 3: The Letter Template That Works

Here's the actual template. Customize the bracketed sections:

Dear [Client Name],

Thank you for trusting [Company Name] with your [HVAC/plumbing/electrical] needs over the past [X years]. We genuinely appreciate your business.

Effective [date 30 days out], our service rates will increase by [X]%. This is our first adjustment in [X months/years] and reflects our continued investment in training, equipment, and the quality technicians you've come to rely on.

Your upcoming scheduled services will be honored at current rates through [date], subject to any existing contract or estimate terms. After that, our new rates will apply.

We remain committed to providing the reliable, professional service you expect. If you have any questions, please call me directly at [your phone].

Thank you for your continued trust.

[Your Name] [Company Name]

Step 4: Timing and Delivery

The 30-day notice window often reduces pushback by giving clients time to adjust their budgets. Unless your specific contracts stipulate a longer notice period, 30 days is a solid starting point. For email, consider sending mid-week when inboxes are less cluttered.

For your best clients, make a phone call first. Keep it brief:

"Hey [Name], I wanted to give you a heads up before you get our letter. We're adjusting our rates by [X]% starting next month. First increase in [X] years. Wanted you to hear it from me directly. Any questions?"

Most will say something like, "Makes sense, thanks for letting me know." That's it. The anxiety was worse than the reality.

Step 5: Handle Objections Simply

If someone pushes back:

"I understand. We've held our rates while our costs have increased significantly. This adjustment keeps us sustainable so we can continue serving you well. I'd hate to see you go, but I understand if you need to make a different decision."

Don't negotiate. Don't offer discounts. The clients who haggle over a 7% increase will haggle over everything forever.

A Better Way to Handle This

The manual approach works. But it requires you to remember every client segment, track responses, and follow up individually. That's fine if you have 20 clients. If you have 200, it becomes a full-time job.

This is where automation earns its keep. A simple CRM or field service management system can:

• Segment your client list automatically based on service history
• Send personalized communications at the right intervals
• Track deliveries, clicks, and replies (note: email open tracking is increasingly unreliable due to privacy features in modern email clients)
• Queue follow-up calls for clients who need personal attention, depending on your specific integrations
• Update your pricing in proposals automatically so you're not quoting old rates

The same principle applies to all your client communication. Consistency builds trust. Automation ensures consistency.

What to Expect After You Send It

The first few days will feel tense. You'll check your email constantly, waiting for angry replies. Here's a common pattern we see:

The vast majority of clients: No response at all. They got the letter, it made sense, life moves on.

A small percentage: A brief acknowledgment. "Got your letter, thanks for the heads up."

A few: Questions or mild pushback. Handle with the script above.

Very rarely: Someone actually leaves.

For the rare client who leaves? Do the math. If you raised rates 8% and lost 1% of clients (assuming they're average-value), your net revenue would be up roughly 6-7% on the remaining business. And you probably lost the most price-sensitive, highest-maintenance clients.

When to Raise Prices Again

Don't wait another three years. Build it into your business rhythm:

• Review costs every 6 months
• Implement increases annually, typically tracking inflation and your cost changes (January or your slow season works well)
• Keep increases modest and consistent rather than large and infrequent

Clients generally accept small annual increases as normal business practice. They panic at large "catch-up" increases that feel sudden.

The Bottom Line

Raising your rates isn't greedy. It's survival. Every month you delay, you're choosing to work harder for less. Your clients aren't thinking about your margins. They're assuming you're doing fine because you haven't said otherwise.

Send the letter. Make the calls. Protect your business.

If you want help automating this process so price increases happen consistently without the stress, let's talk. It's one of the simpler systems to set up, and it often pays for itself quickly.