Q:

What are customer rate increase letters?

A:

Quick Answer

According to the Build Network, customer rate increase letters inform customers of future increases in prices of goods or services. Often when prices go up, a company provides an explanation for the increase via these letters. The top reason for customer rate increases is a concomitant increase in the cost of doing business. When this occurs, a company either absorbs the cost or passes the increase on to its customers.

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Full Answer

Small businesses sometimes send out customer rate increase notifications by means of actual physical letters or e-mails. As the Build Network points out, however, larger corporations are more likely to notify customers of customer rate increases on the company website, in newspaper advertisements or by means of a company e-mail newsletter.

While most people expect prices to increase from time to time, the Build Network suggests that companies give customers good reasons not to take their business elsewhere. As an incentive to maintain customer loyalty, a company might provide more services or additional products to make up for the price increase. For example, when Kraft Foods increased the prices of one of their best-selling cookies, the company added a few new items to the product line in order to encourage customer loyalty. A company may also make a formal statement that, despite the increase in prices, customers will continue to receive the same or better quality service. In short, after receiving a customer rate increase letter, customers should still feel as if they are getting a great deal, even though they are paying more.

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