The Reason You Give for a Price Increase Can Affect Churn

A real-world test found that a market-based explanation reduced customer attrition by 29.5% compared with giving no reason.

The message a subscription company uses to explain a price increase may have a measurable effect on churn.

In a 10-month field experiment involving more than 1,600 customers of a Canadian self-storage company, market-based explanations reduced attrition by 29.5% compared with giving customers no explanation.

Messages about higher operating costs or planned service improvements performed about the same as saying nothing.

The findings were published in the Journal of Marketing in May and highlighted this week by the University of Tennessee’s Haslam College of Business.

What the researchers tested

Customers received price increases of either 5% or 15% and one of four messages:

• Higher operating costs

• Planned service and quality improvements

• Market conditions, such as higher demand or fewer competing options

• No explanation

The reasons used in the experiment were accurate.

Researchers then tracked how long customers stayed after receiving the notice. This allowed them to measure actual cancellations rather than asking people how they thought they might respond.

More customers stayed when the company gave them a truthful explanation tied to demand or limited choices.

That result challenged earlier research suggesting customers would view market-based explanations less favorably.

The researchers found that perceived switching costs helped explain what happened. A message about demand or limited competition may have reminded customers that other options were scarce or inconvenient.

Insider Take

Never assume the price increase message your company usually sends is the right one for your customers.

In this study, a market-based explanation reduced attrition by 29.5% compared with giving customers no reason. That is a meaningful retention result. Familiar messages about higher costs or service improvements performed about the same as saying nothing.

The study focused on self-storage, which comes with meaningful switching friction, including location, availability and the effort of moving belongings. That context may help explain why the market-based message worked.

Even so, subscription companies should not rely on assumptions when churn is at stake. Test price increase messages with a smaller customer group before a full rollout. Track what customers actually do after receiving them, including cancellations, downgrades and support contacts.

This research shows why companies need to get curious about how their customers respond to price increase messaging, then test what works before sending it across the full customer base.

Sources

• University of Tennessee Haslam College of Business, “UT Haslam Researcher Finds Messaging Matters in Price Increase Notifications,” July 14, 2026
  https://haslam.utk.edu/news/ut-haslam-researcher-finds-messaging-matters-in-price-increase-notifications/

• Journal of Marketing, “Cushioning the Blow: Reducing Customer Attrition in Response to Price Increase Notifications,” published online May 11, 2026
  https://journals.sagepub.com/doi/10.1177/00222429261451752

• Western University, “Cushioning the Blow: Justifying a Price Increase in a Subscription Business Context”
  https://ir.lib.uwo.ca/etd/9927/