The Price Increase Playbook

Most price increases start with a number. Costs are up. Margin is down. Someone suggests 8%. Someone else suggests 10%. Then the team starts working backward to explain the change to customers.

I would start one step earlier. What problem is the business trying to solve? Is the goal to correct years of inconsistent discounting, cover higher service costs, fund a materially better product, reposition an underpriced offer or simplify packages that no longer make sense? Those are different problems and should not automatically produce the same answer.

The percentage matters, but it is only one part of the decision. The real work is determining which customers can support a change, what evidence makes the increase reasonable, what the team can trade and how much of the announced increase the business is likely to realize.

A price increase is not a percentage followed by an email. It is a customer and portfolio decision with a percentage attached.

Build the Case Before Choosing the Number

Before recommending a range, I would want to understand five things:

That work will not produce one perfect number. It will show what the portfolio can support and, just as important, where one number should not be applied to everyone.

Inflation may be part of the internal reason for raising prices. It is usually not enough of a customer story. A stronger explanation connects the new price to a better product, stronger service, documented outcomes, a material increase in delivery cost or a current price that is clearly out of line.

Cost explains why the business wants an increase. Value explains why the customer might accept it.

If the team cannot explain that value in plain language, the case needs more work before the message goes out.

Choose the Right Customer Treatment

Customer portfolios include old contracts, one-off discounts, different configurations, uneven usage, varying service needs and relationships at different stages. A flat increase does not clean that up. It preserves it.

The goal is not to create twenty customer segments. It is to separate the situations that genuinely require different treatment and establish a clear rule for each.

Different treatment is not a lack of discipline. Arbitrary treatment is. The rules should be clear enough that sales, finance and customer success understand why two accounts may receive different answers.

Make Fairness Part of the Plan

Customers will compare the new price with what they paid before, what alternatives cost, what they believe peers are paying, and the value they receive. They will also judge the process: how much notice they received, whether the explanation is consistent, and whether the change feels proportionate.

A good explanation will not eliminate every objection. It will reduce the objections the company creates for itself. That matters because perceived fairness affects negotiation effort, concessions, renewals, escalation, and what customers say after the conversation.

Model What the Business Will Keep

A 10% price increase rarely produces 10% more revenue. That sounds obvious, but many plans are still presented as though the announced increase and the result are the same thing.

Illustrative example

Why a 10% Increase Rarely Produces 10%

Take a subscription business with $10 million in annual recurring revenue. If $8 million is eligible for repricing over the next year, a 10% announced increase suggests $800,000 in added run-rate revenue.

Eligible base $8.0M Revenue eligible for repricing

Announced 10% $800K suggested uplift

Realized 7% $560K after discounts and exceptions

Net effect $440K After 1.5% cancellations and downgrades

Now assume discounts and exceptions bring the realized increase down to 7%. That produces $560,000. If cancellations and downgrades remove 1.5% of the eligible base, another $120,000 is gone. The simplified net effect is about $440,000 before implementation cost, collection risk, or changes in expansion.

The announced increase is an input. Realized price, retained revenue, and margin are the results. I would rather see a smaller increase with strong realization than a larger headline number that disappears through concessions and churn.

Prepare the Organization Before the Customer

Customers see the announcement. The business lives with everything that happened before it: the contract review, customer segmentation, financial model, exception policy, billing setup, message and frontline preparation. If those pieces do not agree, the increase becomes a series of improvised negotiations.

1. Start with one objective and one owner. Be clear about what the business is trying to improve and who is accountable for the full program, not just the communication.
2. Build the customer-level facts. Bring together contract timing, current price, discount history, products, usage, cost-to-serve, adoption, renewal risk, and the decision-makers who will receive the message.
3. Set the trade rules early. Decide what sales can offer in exchange for term, prepayment, volume, scope, or another measurable commitment. Define who can approve a reduction, phase, or delay.
4. Prepare the people having the conversation. Give account teams a customer-specific value story, likely objections, and time to practice. Finance, sales, customer success, support, and billing should not give five different answers.
5. Pilot before scaling. Start with a defined group, learn from the objections and billing problems, and adjust before the largest or most sensitive accounts receive the change.

Five Systems Must Agree

I would consider a company ready to raise prices when five parts of the business point in the same direction:

Measure the Full Revenue Bridge

Track the announced increase and the realized increase separately. Then look at how much eligible revenue was actually repriced, the concession rate, retention, churn, downgrades, expansion, margin, support volume, billing disputes, days to collect, and the number of exceptions.

Do not stop at the total. Break the results down by customer group, product, seller or customer-success owner, and treatment. A portfolio average can look fine while one segment is clearly failing.

The pattern tells you what to fix. Low realization may mean the evidence was weak, the guardrails were unclear, or the frontline did not believe the story. Strong realization with rising churn may mean a customer group could not support the increase. Billing disputes may point to an execution problem rather than a pricing problem.

Judge the Increase Over Time

I would not judge a price increase by whether the announcement went smoothly. I would judge it by what the business kept six or twelve months later: revenue realized, margin improved, customers retained, and fewer exceptions carried into the next renewal cycle.

The goal is not the largest increase the company can announce. It is the strongest increase the company can explain in plain language, execute consistently, and sustain.

The best price increase is the one the business can defend, realize and keep.

Sources & Further Reading

• U.S. Bureau of Labor Statistics — Consumer Price Index overview
• McKinsey — B2B pricing: Navigating the next phase of the AI revolution
• McKinsey — Five strategies to strengthen software pricing models
• Xia, Monroe and Cox — The Price Is Unfair!
• Qualtrics — How to run a pricing study
• Stripe — Change the price of existing subscriptions