Raising prices for existing customers is a powerful lever for profitability, with a 20% price increase potentially doubling profit. This episode provides a tactical, step-by-step guide on how to communicate price increases to existing customers through a "price increase letter" to minimize churn and even improve customer quality. Alex Hormozi shares his exact template and strategy, emphasizing transparency and framing the increase around continued value delivery and future improvements.
Key takeaways
Craft a detailed price increase letter that re-sells customers on current value, outlines future improvements, ties the increase to core values, and breaks down the cost to a daily or weekly amount.
Strategically phrase the price increase to communicate added value and integrity, rather than just a cost hike. For instance, break down annual costs into smaller daily/weekly amounts to mitigate perceived impact.
Handle potential customer attrition by anticipating that some will leave, focusing on the increased profitability from those who stay, and using the opportunity to shed "problem" customers.
Consider adding a "P.S." in your communication offering an out for customers facing genuine financial hardship, which adds perspective and opens a channel for discussion rather than outright cancellation.
Communicate price increases via video and direct mail, and disable comments on any public announcements to control the narrative and manage negativity directly.
Once you committed, stick with it. Today, Alex (@AlexHormozi) talks about the process he went through to create the letter on raising prices on customers, the right and wrong ways to increase prices, and the importance of communicating your plans properly.
Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.
Timestamps: (1:54) - Price increase letter: inform customers about changes and purpose.
(5:12) - Attractive price communication is crucial.
(7:59) - Inform customers about future plans, benefits, etc.
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What does this episode say about finance & fundraising?
Craft a detailed price increase letter that re-sells customers on current value, outlines future improvements, ties the increase to core values, and breaks down the cost to a daily or weekly amount.
What does this episode say about customer retention?
Strategically phrase the price increase to communicate added value and integrity, rather than just a cost hike. For instance, break down annual costs into smaller daily/weekly amounts to mitigate perceived impact.
What does this episode say about founder & leadership?
Handle potential customer attrition by anticipating that some will leave, focusing on the increased profitability from those who stay, and using the opportunity to shed "problem" customers.
What does this episode say about conversion & cro?
Consider adding a "P.S." in your communication offering an out for customers facing genuine financial hardship, which adds perspective and opens a channel for discussion rather than outright cancellation.
What does this episode say about finance & fundraising?
Communicate price increases via video and direct mail, and disable comments on any public announcements to control the narrative and manage negativity directly.
