Spotify’s Price Increase Teaches a Lesson to Small Business Owners


Spotify, the world’s leading music streaming service, recently announced a price hike for its premium subscription. As a small business owner, you might be wondering about your own prices and if you should raise them. The answer is not always straightforward, but it’s essential to understand the factors that influence pricing decisions and how to navigate them effectively.

The Necessity of Price Increases

First and foremost, it’s crucial to recognize that raising prices is not inherently bad. In fact, it’s a necessary part of running a successful business. As costs increase due to inflation, supply chain disruptions, or other factors, you must adjust your prices to maintain profitability. Failing to do so can put your business at risk and hinder your ability to grow and innovate.

Seth Godin, a renowned marketing expert, often emphasizes the importance of avoiding the “race to the bottom.” If you’re selling a commodity – a product or service that is easily replicated and lacks unique value – you’ll find yourself constantly competing on price alone. This is a losing battle, as there will always be someone willing to undercut you. Instead, focus on creating something special and differentiated that justifies a higher price point.

Communicating Value to Customers

When raising prices, it’s essential to communicate the value you provide to your customers. They need to understand why your product or service is worth the increased cost. This is where storytelling and branding come into play. Share the narrative behind your business, highlight the quality of your offerings, and emphasize the exceptional customer experience you deliver. By doing so, you’ll earn the right to charge more and retain loyal customers who appreciate what you bring to the table.

Transparency is key when implementing price increases. Be upfront with your customers about the reasons behind the change. Whether it’s due to rising costs, investments in product improvements, or expanded services, make sure they understand the context. This honesty builds trust and shows that you value their support and patronage.

Implementing Price Increases Strategically

When it comes to actually raising prices, there are several strategies to consider. One approach is to gradually increase prices over time, rather than implementing a steep hike all at once. This allows customers to adjust to the new pricing and reduces the risk of sticker shock. Another option is to offer tiered pricing, where customers can choose between different levels of service or features at varying price points. This gives them a sense of control and allows them to select the option that best fits their needs and budget.

It’s also important to assess your market and competition when deciding on price increases. While you shouldn’t base your prices solely on what others are charging, it’s helpful to understand the landscape and ensure that your pricing remains competitive while reflecting the unique value you offer.

Learning from Spotify’s Example

Spotify’s decision to raise prices provides valuable insights for small business owners. The company recognized the need to adjust its pricing to support its ongoing growth, invest in new features, and fairly compensate artists. By communicating these reasons to subscribers and highlighting the enhanced value they’ll receive, Spotify aims to justify the price increase and maintain its position as the leader in music streaming.

As a small business owner, you can learn from Spotify’s approach. Assess your own costs, value proposition, and market position to determine if a price increase is warranted. Be transparent with your customers, emphasize the benefits they’ll receive, and implement the change in a strategic and measured way.


Raising prices is a natural part of running a successful business. As costs increase and the market evolves, it’s essential to adapt and ensure that your pricing reflects the value you provide. By focusing on creating something special, communicating effectively with customers, and implementing price increases strategically, you can navigate this challenging aspect of entrepreneurship with confidence. Remember, your goal is not to race to the bottom but to build a sustainable and thriving business that delivers exceptional value to your customers.

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