Law Practice Management-- How To Identify Your Fees
When thinking through their law firm marketing plans, identifying charges is a challenging law practice management task for most lawyers. In figuring out charges for specific services, lawyers frequently disappoint what they ought to charge. When making their law company marketing plans, too numerous lawyers are afraid of even charging the competitive cost for their services. Even more, they make the prices choices typically without any information or conceptual framework. In addition, instead of focusing their efforts on how they can validate getting top dollar for what they offer, they charge a cost that is frequently way too low and frequently in fact can frighten prospective clients who believe there is something missing from a service that is " inexpensive". In addition numerous attorneys don't realize that many buyers in the market without a doubt are "value buyers" and not trying to find " inexpensive".
So prior to you take a seat and begin thinking through your law practice management rates method you need some differences around prices typically used in law office marketing preparation. Then include your prices technique to your law office marketing strategies. You need to be sure that you are charging a enough charge on everything to ensure you a great earnings not just a good living. If you only draw in individuals who want to pay the least expensive charge for a service, do understand a law practice management law firm marketing strategy is not reliable. These are not loyal customers. Instead, you desire to focus your law practice management and law office marketing intend on bring in clients who will end up being long term assets to the company. Low rate clients are not constructing your base of long term clients I can guarantee you that.
There are basically 4 methods of identifying how much you need to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Rates
This is one great way of determining pricing. Get your assistant to support you in this law practice management task and spend a long time discovering what the series of prices remains in the neighborhood. Have her do a "mystery buyer" study by calling around as if he/she were a prospective client and learn what your competitors say on the phone to her around prices. She might require to call from her house phone to prevent caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and provide to exchange your fees for their charges or you might do that with other lawyers yourself in your market. If you really want to get into it and have maximum data you can write possibly a few dozen rivals in your marketplace and state you are doing a cost survey and if they would send you their fee list you will create a composite list that does not recognize those responding and send them a copy of the outcomes. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services used in your practice area. Now you will see what people are charging for services similar to those you provide. You need to go now be able to develop a range of prices. Utilize this variety to set prices for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. You must be at or in the leading 25% of the costs.
Keep in mind that in basic it is not a excellent law practice management strategy to compete on rate. Most potential customers will see rates that is too low as a signal that there is something missing either from the service, the company, or the company. And individuals who are trying to find a low price will follow that low rate wherever they can discover it instead of becoming long-lasting clients. So be sure that your price covers your costs and a sensible earnings margin.
The Cost Approach in Law Practice Management Pricing
This law practice management pricing approach is really simple truly. The most typical error in law practice management utilizing this approach is to neglect to consist of some type of your cost.
In law practice management typically you count yourself out of the costs and you must include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you must think about one income as find this due you for your time and know-how as the specialist and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the technique used by many auto mechanics (it is called "the flat rate book") and other service providers. This approach is where you identify a fixed rate for various tasks and charge that rate no matter what. If the mechanic invests less time than set aside for the job, he makes more. If he invests more time than designated, he earns less. In the end, it all evens out (well, usually to the mechanics' favor if you ask me). Another example using this method is how managed healthcare has actually used this system with medical professionals and medical facilities . Lawyers can utilize this system if they want.
The "Rule of 3" in Law Practice Management Prices
This " guideline of thumb" called the " guideline of 3" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. For the very first 3rd we will take the overall quantity of salaries/bonuses (not benefits just wages-- benefits go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating earnings) and call that our first third. What you require to do is take the total amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how lots of contingency charge cases won to be sure you hit the target we must strike given our very first 3rd number times 3 (in this example $300,000).
This method shows you how much per hour you need to charge. If you are the owner of the practice you should have a reasonable earnings as well do not you agree? If this method is a bit too confusing do feel free to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to analyze all of these pricing techniques in determining your law practice management prices technique before setting a price and moving ahead with a law office marketing plan to guarantee you are completely exploring all choices. Keep in mind the propensity for most legal representatives is to price too low. Do not do that! In another post I will tell you how to speak to possible clients so you never have a issue getting the charge you are worthy of.