Should you let your customers know about a price increase?

It is a pretty common occurrence for most consumers to get an email from a company they use regularly informing them that prices are going up.

Raising prices – and being transparent – is also preferable to shrinking products (or shrinkflation), a recent YouGov survey revealed. 

For most businesses, particularly those with a strong focus on direct-to-consumer (D2C) or subscription models, the first step is informing customers in advance, and this is not just good manners – it’s essential for retention and long-term brand trust.

Tough times mean tough choices

A survey carried out by insurance company, Simply Business, revealed that 74% of business owners are set to increase their prices in the next 12 months. This was, they relayed, because of higher running costs, a tighter tax burden, and uncertain consumer spending. 

It has impacted every level of business. From energy companies to supermarkets, price hikes have become part of everyday consumer life. 

As The Grocer reported last week, the food and drink price rises have bitten particularly hard. It reported: “In January, food inflation accelerated from 2% to 3.3%. Eight months later, in August, it hit its peak of 5.1%.”

It adds that the figure fell to 4.9% in October, but, at the same time, “consumer price inflation fell faster to 3.6%, making food and drink the biggest driver of consumer price increases in the UK”.

How should SMEs handle a price increase?

An email recently sent out by skincare giant The Ordinary was a masterclass in how to tell customers that prices are going up without losing their loyalty. The key is a perfect blend of transparency and sincerity. The email gave a clear message – we are going to increase pricing by this much on these products, and this is why. 

The team wrote: “We know that even a small change in price can impact your accessibility to the products you love, but with our rising operating costs, some small changes need to be made to ensure our sustainability long into the future.”

Transparency builds trust. By explaining why the price is rising (e.g., increased cost of raw ingredients, global shipping, or paying staff better wages), businesses can reposition the increase as a necessary step for sustainability, not a simple cash grab. This honesty is highly valued by modern consumers. 

The Ordinary also balanced the news of a price hike of one product with a price decrease for another, which is sure to keep customers happy. 

Giving due warning

The email also spelt out the details for the specific products, including when the price hike would come into effect – in this case, 2 January 2026. 

Timing is important. A sudden price hike can lead to high customer churn and reputational damage. An advanced warning gives customers time to adjust their budgets and accept the change. 

Giving a warning also means that customers can stock up on their favourite products before the price change, as opposed to it coming as a nasty surprise when they go to the website to shop. For businesses, this can also provide a temporary revenue boost before the new price takes effect. 

Legal implications

For some business models, namely subscription services or contracts, businesses must give advance notice (often 30 days minimum) of any price change. This is often a legal requirement under consumer protection laws. 

As law firm, Osbourne Clarke explains, while businesses might want to make changes partway through a consumer contract, “Consumer protection law may deem certain changes to be unfair and therefore unenforceable unless the consumer has the right to get out of the contract and has given their express consent to the change.”

Price increases are among the most common changes for “in life” subscriptions and so businesses need to know their legal position; and transparency will, again, be key as well as giving the consumer the option to cancel. 

Whatever relationship a business has with a consumer, the way that they communicate a price increase could see them either retain loyalty (and perhaps even get a financial boost from quick sales) or could see their customers turning their backs and running to competitors. 

While the reality of the current economic climate makes price rises a necessity, it also makes the way that businesses communicate them even more important because every sale counts.