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How to Write a Rate Increase Notification Letter

Updated March 23, 2017

Rate increases are a regular part of business, but they are rarely welcomed by customers. Customers who are extremely sensitive to rate hikes may terminate the relationship no matter how insignificant the rate increase. That makes it imperative for management to explain the rate hike with a well-written letter that shows sensitivity and understanding. Really large customers should learn about rate increases through a courtesy telephone call from the owner or a senior manager. Then send the customer a letter as confirmation.

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  1. Prepare for writing the letter by finding ways to personalise it as much as possible. Include memorable anecdotes about the customer relationship to help soften the tone of the letter as you appeal to the customer's loyalty. This possibly isn't a reasonable option for a large company with thousands of customers, but smaller companies should certainly use the letter to connect emotionally with a loyal customer.

  2. Open the letter by thanking the customer for great support. Describe something memorable about work your company has performed for the customer, if applicable. Move on to the rate increase by explaining that increased costs are forcing you to increase the rate. Announce the new rate and compare it to the current rate. Point out the percentage of the increase to show full transparency and understanding. Indicate the last time the customer's rate was increased -- even if this is the second increase in two years.

  3. Provide further explanation about why the increase is necessary, if warranted. Discuss steps you are taking to control costs and how you are offering additional value despite cost increases. Point to investments you are making in customer service such as longer hours or increased staff. Offer the customer something for free or at a discount, such as a free home air conditioning checkup, or the next lawn service for 25 per cent off. The goal is to soften the impact of the increase and provide the customer with incentive to stay with your company.

  4. Acknowledge that rising costs are tough for everyone and that your company is doing everything possible to provide the best possible service. End the letter with a complimentary closing such as "Yours truly," or "Sincerely."

  5. Sign and mail the letter.

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About the Author

Robert Lee has been an entrepreneur and writer with a background in starting small businesses since 1974. He has written for various websites and for several daily and community newspapers on a wide variety of topics, including business, the Internet economy and more. He studied English in college and earned a Bachelor of Arts in liberal arts from Governor's State University.

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