Diversity and Inclusion at Help Scout: 2018 Update

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How the company approaches the price increase, however — from gathering data, to writing the price increase letter to customers, to implementation — makes a huge difference in how customers will interpret the decision.

When your company has decided to raise its prices, there are some clear do’s and don’ts that can ensure you’re putting customers first every step of the way. Here’s our playbook for managing a price rise with the utmost care, including cutting-edge research and examples of both the right and wrong way to communicate the hike in a letter to your customers.

How to raise prices with a spirit of generosity

Although a clear strategy is the backbone of any effective price increase, at the heart of a positive experience for customers is an underlying spirit of generosity.

Business leaders always have to toggle between prioritizing generosity and growth.

Matt Carroll

Across the board we found a correlation between a higher customer service rating and willingness to pay. These results may seem intuitive from an e-commerce perspective. Yet, on the SaaS side, they’re of particular interest, because customer service isn’t something we necessarily think about as a top priority in the world of software, at least in the aggregate. That finding doesn’t surprise us, though.

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Dedicate significant resources to testing price changes

Given the intricacies of a successful pricing strategy, there’s a temptation to “wing it” and see what happens. Don’t fall for it. A price change should never be in reaction to a competitor, a customer, or even a big shift in the market.

Instead, the best companies focus on building out a pricing infrastructure, or the mechanisms that help you analyze potential pricing strategies and gauge their performance over time. According to McKinsey & Company, businesses that fail to build this infrastructure fall into one of two traps: They underestimate the power of intelligent pricing, or they choose not to invest in a critical price-testing model.

Unlike a lot of other product investments, developing a rigorous, data-based pricing strategy has a quantifiable ROI. The same article from McKinsey suggests that strategically increasing a price by 2-4% could increase profits by 15-25%
. No matter your business, knowing how to increase prices at your company hinges on a deep understanding of your product and its ever-changing value in a dynamic market.

The pricing process also requires deliberate, continuous testing over time. Given that, don’t refer to a price as everlasting or “forever” (something we learned the hard way!) or offer lifetime guarantees. Customers envision a lifetime as their lifetime, not the lifetime of the product.

The 3 keys of price testing

McKinsey hints at three keys to help pinpoint how to increase your prices. At Help Scout, we’ve taken a similar approach. By planning ahead, you radically increase the likelihood of a positive outcome for everyone, including your customers.

A clear structure

Our intention is always to strike a balance between maximizing the value we bring to customers and sustaining the company’s momentum. These two drivers are not necessarily mutually exclusive, but the right pricing structure requires a complex, ever-changing calculation that’s derived from constant analysis of the two.

Underlying analytics

At any given time, a team of up to three Help Scout engineers is assessing pricing and packaging options with the above balance in mind. During the testing stage, our team focuses on two clear but often contrasting indicators: price sensitivity data from A/B tests and the data that underpins our intention to deliver the strongest price-performance ratio in the market.


It’s not uncommon to run more than 10 A/B tests to identify the right packaging and pricing mix for customers. No fewer than a dozen people on all sides of the company contribute to the change from the initial analysis through to customer communication. We take everything about the process seriously, and that’s the way it should be.

How to write a great price increase letter

Some companies follow all of the above advice, then drop the ball instead of running it across the finish line. If you’ve ever been taken aback by a sudden price hike, you know what I mean. It doesn’t matter how much thought a company puts into a price increase if they can’t communicate with empathy and transparency, and way in advance.

Research shows customers perceive a price rise as fairer when the company communicates the change directly. The breadth of the explanation needs to match the significance of the price increase — i.e., a small price increase requires limited clarification, but a big increase requires a lot of detail.

  • Less than one month’s notice for the price hike
  • No “thank-you” for being a loyal customer
  • Impersonal, robotic tone
  • No explanation of the reason behind the change
  • No context for how often a price rise takes place
  • No indication of the percentage of the price increase
  • A generic signoff with no accountability from a leader at the company
  • Just one email notification; no follow-ups
  • No explanation of the customer’s options

Every day, businesses put enormous effort into gaining the trust of customers. You don’t want to throw it all away with a 2% price hike. Approach raising prices with the highest level of attention and expertise that your company can afford. With a clear focus and dedication to digging into the details, you’ll be able to optimize a strategic price rise without risking the customer relationships at the center of your success.

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