When thinking through their law firm marketing strategies, determining fees is a hard law practice management task for many attorneys. In determining fees for particular services, attorneys often fall brief of what they need to charge. Too numerous attorneys hesitate of even charging the competitive rate for their services when making their law practice marketing plans. Even more, they make the rates decisions frequently without any information or conceptual framework. In addition, instead of focusing their efforts on how they can justify getting leading dollar for what they offer, they charge a fee that is frequently way too low and frequently in fact can frighten prospective customers who believe there is something missing from a service that is "cheap". Furthermore lots of attorneys don't recognize that the majority of purchasers in the market without a doubt are "value purchasers" and not trying to find " inexpensive".
Before you sit down and begin believing through your law practice management pricing method you need some distinctions around prices typically utilized in law firm marketing preparation. Then include your pricing strategy to your law firm marketing strategies. You require to be sure that you are charging a adequate cost on everything to guarantee you a excellent profit not simply a good living. Do understand a law practice management law firm marketing plan is ineffective if you only attract individuals who desire to pay the most affordable charge for a service. These are not loyal clients. Rather, you wish to focus your law practice management and law office marketing intend on attracting clients who will become long term properties to the firm. Low cost customers are not building your base of long term customers I can promise you that.
There are basically four methods of figuring out how much you ought to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Pricing
This is one good way of determining rates. Get your assistant to support you in this law practice management job and invest some time finding what the variety of prices is in the community. Have her do a " secret buyer" study by calling around as if he/she were a possible customer and learn what your competitors say on the phone to her around pricing. She might need to call from her house phone to prevent caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and use to exchange your fees for their charges or you might do that with other lawyers yourself in your market. If you actually desire to enter it and have optimal data you can compose perhaps a couple of lots rivals in your market and state you are doing a fee survey and if they would send you their charge list you will create a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most common services used in your practice location. Now you will see what people are charging for services similar to those you offer. You ought to be able to come up with a variety of rates. Utilize this range to set costs for your own services. My suggestion in law company marketing planning is to charge at the 75% level of the list. So you need to be at or in the leading 25% of the fees.
Keep in mind that in basic it is not a great law practice management strategy to contend on price. A lot of possible clients will see rates that is too low as a signal that there is something missing either from the service, the service provider, or the company.
The Cost Approach in Law Practice Management Pricing
This law practice management rates method is extremely straightforward really. One simply identifies what the expenses are to provide product and services and adds on a affordable revenue, somewhere between fifteen percent at the least and possibly thirty three percent at the most. The most common error in law practice management using this method is to disregard to include some form of your cost. Solo and small company attorneys tend to not include their own wage!
OK, let me state it again. In law practice management typically you count yourself out of the expenses and you must include yourself in the expenses. Why? Typically you are doing at least some of the technical work. Yes? Typically you are doing at least some of the management work. Yes? As the owner of the business you are due a reasonable earnings. Yes? If you are all three of these in one, you must consider one income as due you for your time and expertise as the professional and manager in addition to a revenue of fifteen to thirty percent due you as the owner. So make sure to consist of a reasonable cost for your supervisory and technical work in the expenses part of this formula.
Fixed Rate Approach in Law Practice Management Rates
This is the approach used by lots of car mechanics (it is called "the flat rate book") and other additional hints service providers. This approach is where you determine a set rate for various jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has actually used this system with health centers and physicians .
The " Guideline of 3" in Law Practice Management Prices
This "rule of thumb" called the " guideline of three" utilized in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. For the very first 3rd we will take the total quantity of salaries/bonuses (not advantages just incomes-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are producing revenue) and call that our first third. What you need to do is take the total quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per fixed rate or how many contingency fee cases won to be sure you struck the target we must strike given our very first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you require to charge. Considering that you understand the number of billable hours each revenue generator can do each month, simply divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be assured of a 15% to 30% net make money from your operations. If you are the owner of the practice you deserve a reasonable earnings as well don't you concur? This approach is referred to as the Rule of 3. , if this technique is a bit too complicated do feel totally free to call me and I will help you arrange it out in a few minutes on the phone.
It is a great concept to believe through all of these rates approaches in determining your law practice management prices technique prior to setting a price and continuing with a law company marketing strategy to guarantee you are completely checking out all choices. Remember the tendency for many attorneys is to price too low. Don't do that! In another post I will inform you how to speak with possible customers so you never have a problem getting the fee you should have.