When thinking through their law firm marketing plans, figuring out charges is a challenging law practice management job for a lot of lawyers. In identifying fees for certain services, attorneys frequently disappoint what they must charge. Too many lawyers hesitate of even charging the competitive price for their services when making their law practice marketing plans. Further, they make the pricing choices frequently without any data or conceptual framework. Additionally, rather of focusing their efforts on how they can validate getting leading dollar for what they provide, they charge a fee that is typically way too low and often in fact can frighten prospective clients who think there is something missing from a service that is "cheap". Additionally many attorneys do not understand that the majority of purchasers in the marketplace without a doubt are " worth purchasers" and not searching for " inexpensive".
Prior to you sit down and begin thinking through your law practice management pricing strategy you require some differences around prices commonly utilized in law firm marketing planning. Do understand a law practice management law firm marketing plan is not efficient if you only attract individuals who desire to pay the lowest fee for a service. Instead, you want to focus your law practice management and law company marketing strategies on bring in customers who will become long term properties to the company.
There are basically 4 methods of determining just how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Pricing
This is one good method of identifying pricing. Get your assistant to support you in this law practice management task and spend a long time discovering what the range of pricing is in the community. Have her do a "mystery shopper" study by calling around as if he/she were a prospective client and learn what your competitors say on the phone to her around rates. She may require to call from her home phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and use to exchange your fees for their fees or you might do that with other legal representatives yourself in your market. If you actually wish to enter into it and have optimal information you can write perhaps a couple of dozen rivals in your marketplace and state you are doing a charge study and if they would send you their cost list you will develop a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice area. Now you will see what individuals are charging for services similar to those you provide. You must be able to come up with a variety of costs. Use this range to set prices for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. You ought to be at or in the top 25% of the costs.
Keep in mind that in basic it is not a good law practice management method to compete on rate. A lot of prospective clients will see pricing that is too low as a signal that there is something missing out on either from the service, the company, or the firm. And individuals who are looking for a low cost will follow that low rate any place they can find it instead of ending up being long-term customers. Be sure that your rate covers your expenses and a sensible earnings margin.
The Cost Method in Law Practice Management Pricing
This law practice management prices method is extremely simple actually. One merely determines what the expenses are to deliver services or products and adds on a sensible earnings, someplace in between fifteen percent at the least and possibly thirty three percent at the most. The most typical mistake in law practice management using this approach is to overlook to consist of some kind of your expense. Solo and small company attorneys tend to not include their own wage!
OK, let me say it once again. In law practice management often you count yourself out of the expenses and you should include yourself in the expenses. Why? Typically you are doing a minimum of some of the technical work. Yes? Frequently you are doing a minimum of some of the management work. Yes? As the owner of business you are due a reasonable earnings. Yes? If you are all three of these in one, you should consider one income as due you for your time and proficiency as the specialist and supervisor in addition to a revenue of fifteen to thirty percent due you as the owner. So be sure to include a affordable cost for your supervisory and technical operate in the expenditures part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the method utilized by lots of vehicle mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a fixed rate for numerous jobs and charge that rate no matter what. Another example utilizing this technique is how managed health care has used this system with medical facilities and doctors .
The " Guideline of Three" in Law Practice Management Pricing
This " guideline of thumb" called the " guideline of 3" used in law practice management is not what your CPA might inform you and it does not fail you either. Ask your Certified Public Accountant what they think of it and they will like it. To begin we are going to be thinking in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not benefits simply incomes-- benefits enter into the second 3rd following) for the income generators and/or timekeepers (this includes you if you are generating income) and call that our first third. Include up the wages of the attorneys, paralegals, and legal secretaries who generate revenue or are timekeepers and call this your very first third (lets simply state that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your 2nd third which we will call your "overhead" ( hence that 2nd 3rd is $100,000 and do not forget you if you are doing some handling partner type responsibilities because that part of your time goes here in overhead). Then take that very same number and we will call that your last 3rd, which we will call gross earnings (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how many contingency charge cases won to be sure you struck the target we need to strike provided our very first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you need to charge. If you are the owner of the practice you deserve a reasonable earnings as well do not you concur? If this approach is a bit too confusing do feel free to call me and I will assist you sort it out in a couple of minutes on the phone. additional reading
It is a great concept to think through all of these prices approaches in determining your law practice management pricing method before setting a rate and moving ahead with a law company marketing strategy to ensure you are completely checking out all choices. In another post I will inform you how to speak to potential customers so you never ever have a issue getting the fee you are worthy of.