Determining charges is a hard law practice management job for many attorneys when believing through their law company marketing strategies. In determining charges for specific services, lawyers typically fall brief of what they should charge. Too lots of attorneys are afraid of even charging the competitive rate for their services when making their law company marketing plans.
Before you sit down and begin thinking through your law practice management pricing strategy you require some differences around pricing typically used in law firm marketing planning. Then add your pricing strategy to your law office marketing plans. You require to be sure that you are charging a sufficient cost on whatever to guarantee you a great profit not just a great living. Do understand a law practice management law practice marketing strategy is not reliable if you just draw in people who wish to pay the most affordable cost for a service. These are not loyal clients. Instead, you wish to focus your law practice management and law company marketing plans on attracting customers who will end up being long term properties to the firm. Low cost customers are not building your base of long term clients I can assure you that.
There are generally four ways of identifying how much you need to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
This is one excellent way of figuring out pricing. Get your assistant to support you in this law practice management task and spend some time finding what the variety of rates is in the community. Have her do a " secret consumer" research study by calling around as if he/she were a potential client and discover out what your competitors say on the phone to her around rates. She might 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 charges or you might do that with other legal representatives yourself in your market. If you truly desire to enter it and have maximum data you can compose possibly a few dozen competitors in your market and state you are doing a cost 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 easy for them consist of a stamped, self-addressed envelope with a list of the most common services provided in your practice location. Now you will see what individuals are charging for services comparable to those you use. You should be able to develop a range of costs. Utilize this variety to set costs for your own services. My suggestion in law company marketing preparation 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 method to complete on rate. Most potential clients will see pricing that is too low as a signal that there is something missing either from the service, the company, or the firm. And people who are looking for a low price will follow that low price any place they can discover it instead of becoming long-term customers. So make certain that your price covers your expenses and a affordable profit margin.
The Expense Technique in Law Practice Management Pricing
This law practice management prices approach is extremely simple truly. The most typical mistake in law practice management using this method is to neglect to consist of some kind of your expenditure.
OK, let me state it once again. In law practice management typically you count yourself out of the expenditures and you must include yourself in the expenses. Why? Typically you are doing a minimum of some of the technical work. Yes? Often you are doing at least some of the management work. Yes? As the owner of business you are due a reasonable revenue. Yes? If you are all 3 of these in one, you must think about one salary as due you for your time and know-how as the technician and supervisor along with a earnings of fifteen to thirty percent due you as the owner. So make certain to include a affordable cost for your managerial and technical operate in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Pricing
This is the approach utilized by lots of automobile mechanics (it is called "the flat rate book") and other service address suppliers. This technique is where you identify a fixed rate for various tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has utilized this system with physicians and medical facilities .
The " Guideline of Three" in Law Practice Management Pricing
This " guideline of thumb" called the " guideline of three" utilized in law practice management is not what your CPA might tell you and it does not fail you either. For the very first third we will take the total amount of salaries/bonuses (not benefits just salaries-- advantages go into the 2nd third coming next) for the profits generators and/or timekeepers (this includes you if you are generating profits) and call that our very first 3rd. What you require to do is take the overall quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how many contingency cost cases won to be sure you hit the target we next page must strike given our very first third number times 3 (in this example $300,000).
This approach 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 agree? If this technique is a bit too complicated do feel complimentary to call me and I will assist you arrange it out in a couple of minutes on the phone.
It is a great idea to think through all of these rates methods in identifying your law practice management rates strategy prior to setting a price and moving ahead with a law firm marketing strategy to ensure you are completely exploring all choices. In my site another post I will tell you how to speak to prospective customers so you never ever have a problem getting the cost you should have.