Identifying costs is a difficult law practice management job for many attorneys when thinking through their law company marketing strategies. In identifying charges for particular services, lawyers often fall short of what they need to charge. When making their law firm marketing strategies, too many lawyers are afraid of even charging the competitive rate for their services. Further, they make the pricing decisions often without any data or conceptual structure. In addition, instead of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a fee that is typically way too low and often in fact can terrify off prospective clients who believe there is something missing from a service that is " inexpensive". In addition numerous attorneys don't recognize that a lot of buyers in the market without a doubt are " worth buyers" and not trying to find " inexpensive".
Prior to you sit down and begin believing through your law practice management prices strategy you require some distinctions around prices frequently used in law firm marketing planning. Do understand a law practice management law firm marketing plan is not effective if you just draw in individuals who want to pay the lowest cost for a service. Instead, you desire to focus your law practice management and law firm marketing strategies on drawing in customers who will become long term assets to the company.
There are basically four methods of identifying how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one excellent way of determining prices. Get your assistant to support you in this law practice management job and invest a long time finding what the series of rates is in the neighborhood. Have her do a "mystery shopper" study by calling around as if he/she were a prospective customer and discover what your rivals state on the phone to her around pricing. She may need to call from her house phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their costs or you could do that with other attorneys yourself in your market. If you actually desire to get into it and have maximum information you can compose perhaps a few dozen rivals in your market and say you are doing a charge survey and if they would send you their fee list you will produce a composite list that does not recognize those reacting and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services offered in your practice area. Now you will see what people are charging for services similar to those you offer. You need to have the ability to come up with a range of prices. Utilize this variety to set rates for your own services. My suggestion in law office marketing planning is to charge at the 75% level of the list. You ought see this here to be at or in the top 25% of the fees.
Bear in mind that in general it is not a good law practice management strategy to complete on rate. A lot of potential customers 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 company. And individuals who are trying to find a look at this now low price will follow that low price any place they can discover it instead of becoming long-term clients. So make certain that your rate covers your costs and a sensible earnings margin.
The Expense Approach in Law Practice Management Rates
This law practice management rates technique is very uncomplicated really. One just determines what the expenses are to provide product and services and includes on a sensible revenue, somewhere between fifteen percent at the least and perhaps thirty 3 percent at the most. The most common mistake in law practice management utilizing this technique is to overlook to consist of some form of your expenditure. Solo and small firm lawyers tend to not include their own salary!
OK, let me state it again. In law practice management frequently you count yourself out of the expenses and you need to include yourself in the expenses. Why? Frequently you are doing a minimum of some of the technical work. Yes? Frequently you are doing a minimum of a few of the management work. Yes? As the owner of the company you are due a reasonable earnings. Yes? If you are all three of these in one, you ought to consider one wage as due you for your time and competence as the technician and manager in addition to a earnings of fifteen to thirty percent due you as the owner. Be sure to include a affordable cost for your managerial and technical work in the costs part of this formula.
Fixed Rate Approach in Law Practice Management Prices
This is the approach used by many car mechanics (it is called "the flat rate book") and other service companies. This approach is where you determine a fixed rate for different tasks and charge that rate no matter what. Another example using this approach is how managed health care has actually used this system with physicians and medical facilities .
The "Rule of Three" in Law Practice Management Pricing
This " guideline of thumb" called the "rule of anonymous 3" utilized in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. For the first third we will take the total amount of salaries/bonuses (not advantages just salaries-- advantages go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are creating earnings) and call that our very first 3rd. What you require 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 hit the target we should strike given our first 3rd 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 are worthy of a reasonable profit as well don't you concur? If this method is a bit too confusing do feel complimentary to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a good idea to think through all of these pricing methods in determining your law practice management prices technique prior to setting a cost and moving ahead with a law company marketing strategy to ensure you are completely checking out all alternatives. In another article I will tell you how to speak to possible customers so you never ever have a issue getting the charge you are worthy of.