As much as we would rather not increase subscription prices, it’s more of an inevitability in an inflationary economic climate.
Raising prices can be a nerve-wracking time for any subscription commerce business. The decision to increase prices is never taken lightly but is often the result of tough economic conditions forcing a company’s hand. Sadly, while raising subscription prices is essential for survival, it’s a double-edged sword that can see subscribers cancelling in droves.
While some cancellations are inevitable — after all, your subscribers will feel the same economic pinch — being transparent about your increases can help mitigate the fallout. The best way to approach price increases is to know how to best communicate them to your subscribers.
Why the right price increase communication is important
As we noted in our previous post, some communicate price increases well, and others seem to go out of their way to irritate their subscribers.
Strava, for example, faced massive backlash in response to their price increases. In their poorly communicated efforts, they appeared to target certain markets for price increases, creating a disparity between customers in different countries. The backlash was so strong that some subscribers discovered Strava was potentially violating EU laws.
Pret a Manger, however, has been incredibly smart with their recent price increase. They rebranded and added extra benefits rather than just increasing prices for their existing subscription service. The response has been mostly positive, with subscribers getting more for their money while Pret can offset increasing costs.
Thinking carefully about how you communicate your price increases really can make the difference between a long-term subscriber and an instant cancellation.
5 top tips for talking to your subscribers about price increases
Communicate with them directly
An issue the big players tend to have is early reporting of potential price changes. A company like Netflix or Xbox often has news stories about price changes coming out well before any official notice. This can leave subscribers angry because it feels like the price change is being hidden. This is less of an issue with smaller businesses, but the lesson still applies — let your customers know first.
Give subscribers plenty of time
Last-second price increases are going to make your subscribers turn and run. You shouldn’t be announcing a price increase with immediate effect or with just a couple of days notice.
The conversation surrounding price increases takes a long time on the business side of things, so it should be no surprise that subscribers also need to take some time to get their heads around the price increase.
Even if you believe you’re deploying a small increase, that could make all the difference to your subscribers. They may need to reassess their monthly outgoings to ensure they can still afford to subscribe. The sooner your customers know, the better they can manage the price increase.
Explain your reasoning
A common thought is that businesses are increasing prices out of greed. Sure, there is precedent for that with some companies, but most price increases are born out of necessity.
Maybe your business is growing faster than you anticipated and you need to spend more to maintain the quality of your service. Your operating costs may be increasing. A business might need to increase its prices for many reasons, but you need to be transparent about them.
You would be surprised how many customers are happy to pay a little more if it means supporting and maintaining a service they love. By being open and honest with them about your reasons, you can strengthen the relationship with your subscribers even in the face of tough news.
Give subscribers a way to reach out
Your subscribers are bound to have questions about the price increase. As part of your transparency efforts, you should ensure that customers know how to contact your customer service team to get those questions answered.
By allowing subscribers to reach out with questions or concerns, your price increase news turns into an opportunity to foster a real connection between you and your subscribers. This will help with retention, securing long-term subscribers, and increase the likelihood of word-of-mouth marketing from your loyal subscribers.
Remember that your subscribers are going through the same economic struggles. Times are tough for everyone right now, be it business or individual. Remembering this when preparing price increases is important, as it helps you to frame the price increase in the least damaging way.
You need to try and frame the price increase in a way that lets subscribers know that, while they’re struggling, the price increase is crucial to the company’s survival. This links in with the importance of transparency.
Be personable and make subscribers feel your appreciation for them, but don't apologise. This is the best choice for your business, so don't apologise — explain why you've made this choice and stand by it.
Prepare for your price increase with Limio
With Limio, you can easily get your new pricing rolled out globally to new subscribers.
No matter how well you prepare your price increase or how good your customer feedback is, you’re still likely to face cancellations. This is when you need to start thinking about your cancellation process.
While some subscribers will cancel regardless of your efforts, don’t give up. Crafting the right cancellation process has the potential to retain your subscribers. Even if they don’t continue their subscription right away, a great cancellation process will convince leaving subscribers to return when their circumstances allow it.
If you need help creating a fully-featured and customisable cancellation flow for your subscription service, Limio can help. Limio makes incorporating surveys, personalised discounts, switch offers, and more into your cancellation process easy.