Price Increase Proposal

Business Letter

Dear …

RE: Price Increase Proposal

I have recently spent some time doing product research and reviewing the current pricing structure on our __(type of products)__. This exercise has revealed to me some alarming facts as follows:

  1. The __(cost of materials for/wholesale cost on/etc.)__ __(type of products)__ products
  2. __(have/has)__ increased by __(%)__ over the past __(length of time)__. During this time, we have not increased our retail prices and, therefore, have seen quite the reduction in our margins.
  3. Continuous rising costs from suppliers have also resulted in an increase to the cost of our __(type of products)__ inventory; by at least __(%)__ __(over the past __(length of time)__. No part of this increase has been passed on to our customers. Again, our margin here has been gravely affected.
  4. Our own overhead expenses have risen by approximately __(%)__ since our last product pricing revision.
  5. And, finally, my research has revealed that the retail prices we currently offer for our products are __(considerably less/approximately __% lower/etc.)__ than most of our competitors.

Economics tell us that we need a price increase. Since __(year)__, our overall margins have fallen to an estimated __(%)__, from the acceptable __(%)__. In view of this, I propose that we restructure the pricing of all of our inventory soon, returning our margins back to __(%)__. Based on my market research, I believe this is easily obtainable right now without causing dire affects to our market share.

I thank you for your consideration of this proposal and look forward to hearing from you soon.

Respectfully yours,