How much notice should I give before a price increase?

Thirty days in writing is a sensible default, and some service agreements require it. For seasonal work, announce before the season starts — customers plan their budgets then, and renewals are a natural moment.

How big a price increase is too big?

There’s no universal number, but large one-time jumps are harder to accept. A common approach is to phase anything above about 15% into two or three steps a few months apart, and to explain each step in the first letter.

Should I raise prices for every customer by the same percentage?

Usually not. Customers whose price was set years ago, who are far from your shop, or who were underpriced from the start have fallen furthest behind. A per-customer increase based on when each price was set is fairer and recovers more margin with less risk.

Do I have to explain why prices are going up?

You don’t have to, but a short, specific reason — with a published source for fuel or inflation — makes the change easier to accept and cuts down on calls.

How to Raise Prices for a Service Business (with Sample Letter)

Most small service businesses wait too long to raise prices, then do it all at once with a flat percentage that’s too much for some customers and not enough for others. A better increase is specific, explained, and based on what each customer actually costs you to serve. Here’s how to do it in six steps.

1. Measure what changed since each price was set

Your price was right when you set it. What moved is everything underneath it: fuel, the hourly cost of your crew (wages plus payroll taxes and benefits), materials, insurance and software. For each customer, compare what a visit cost you then with what it costs today. A customer you priced three years ago has absorbed three years of increases; one priced last spring has absorbed a few months.

For fuel and general inflation, use published numbers you can cite: the U.S. Energy Information Administration’s average fuel prices and the Bureau of Labor Statistics Consumer Price Index. For example, regular gasoline averaged $3.06 a gallon in October 2025 and $4.31 in October 2026 in EIA data, and CPI rose about 4% over the same year.

2. Decide what kind of increase it is

Permanent price change for costs that won’t come back down — labor, materials, insurance.
Fuel surcharge for fuel, which can fall again. It’s temporary and tied to a published price, so customers accept it more readily. Use the fuel surcharge calculator to size it.
Both is common for route businesses: raise the base rate for labor and materials, and let a surcharge float with fuel.

3. Keep your margin, not just your costs

Adding only the dollar increase in cost keeps your profit in dollars but lets your margin shrink. To keep the same margin you had when the price was set, scale the increase: if a visit cost you $49.56 then and $54.55 now on a $55 price, simply adding $4.99 leaves you with a thinner margin than before. Then set a floor — the least you’ll accept from any customer, as a margin percentage or dollars per visit — and bring underpriced customers up to it.

4. Phase in big jumps

If a customer’s increase is large — say more than 15% — split it into steps a few months apart and announce both steps in one letter. Customers handle a predictable two-step change better than a surprise.

5. Tell customers clearly — in writing, with notice

A good letter is short. It thanks the customer, says when their price was set, gives two or three specific reasons with a source, states the old and new price and the start date, and offers a way to ask questions. Avoid apologizing at length or blaming “the economy.” Here’s a template:

Hi [Customer name],

Thank you for being a customer of [Your business]. We set your current rate in [month and year] and have held it there since.

Over that time, the cost of serving you has gone up: gasoline is up 41% (U.S. Energy Information Administration), our labor costs are up 5%, and materials are up 11%.

Starting [date], your rate will change from $55.00 to $61.50 per visit. That covers our higher costs so we can keep delivering the same service. It does not change what you get from us.

If you have any questions, just reply or give me a call.

Thank you,
[Your name]
[Your business]

Send it about 30 days before the change (check your agreements). For seasonal trades, send it before the season so customers can plan.

6. Be ready for the phone call

Most customers won’t call. For those who do: acknowledge it (“nobody likes a higher bill”), give the one-line reason (“fuel and labor have gone up since we set your price in 2025”), and restate what stays the same — the crew, the schedule, the quality. If a customer leaves over a fair, explained increase, check whether they were profitable to begin with; many weren’t.

Common mistakes

The same percentage for everyone. It over-charges recent customers and under-charges the ones who’ve fallen furthest behind.
Waiting for the “right time.” Every month of delay is margin you won’t get back.
Hiding it in an invoice. Surprise increases cause more cancellations than announced ones.
Charging a full round trip per stop on a route. If a truck makes many stops, each customer only shares the drive.

YearlyRaise does steps 1 to 5 for your whole customer list: it measures each customer’s cost change, applies your floor and phase-in rules, and writes a personal letter for every customer.

How to raise prices for a service business