Determining charges is a challenging law practice management task for most attorneys when analyzing their law practice marketing plans. In determining fees for specific services, attorneys typically disappoint what they should charge. Too numerous lawyers hesitate of even charging the competitive price for their services when making their law company marketing plans. Further, they make the rates choices frequently without any data or conceptual framework. In addition, rather 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 actually can frighten off prospective clients who think there is something missing from a service that is " inexpensive". In addition many lawyers do not understand that the majority of buyers in the marketplace by far are " worth purchasers" and not looking for " low-cost".
Prior to you sit down and begin believing through your law practice management pricing strategy you need some distinctions around prices typically used in law firm marketing planning. Do understand a law practice management law firm marketing strategy is not efficient if you just draw in individuals who want to pay the least expensive fee for a service. Rather, you want to focus your law practice management and law company marketing plans on drawing in customers who will become long term properties to the company.
There are basically four ways of figuring out 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 great way of identifying prices. Get your assistant to support you in this law practice management task and spend a long time discovering what the series of rates is in the neighborhood. Have her do a " secret shopper" research study by calling around as if he/she were a potential customer and learn what your rivals say on the phone to her around pricing. She might require to call from her house phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your competitors and provide to exchange your charges for their fees or you could do that with other legal representatives yourself in your market. If you truly desire to get into it and have optimal information you can compose maybe a few dozen rivals in your marketplace and state you are doing a charge study and if they would send you their fee list you will develop a composite list that does not determine 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 offered in your practice area. Now you will see what people are charging for services comparable to those you offer. You must be able to develop a variety of costs. Use this variety to set rates for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the fees.
Bear in mind that in general it is not a excellent law practice management technique to complete on cost. The majority of prospective clients will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company. And individuals who are searching for a low rate will follow that low rate any place they can discover it rather than becoming long-term customers. So be sure that your rate covers your costs and a sensible profit margin.
The Cost Method in Law Practice Management Rates
This law practice management pricing method is very simple truly. One merely determines what the expenses are to provide products or services and includes on a affordable revenue, somewhere in between fifteen percent at the least and possibly thirty three percent Extra resources at the most. The most typical mistake in law practice management utilizing this method is to neglect to include some form of your expenditure. Solo and little firm lawyers tend to not include their own income!
OK, let me state it again. In law practice management often you count yourself out of the expenses and you need to include yourself in the costs. Why? Frequently you are doing a minimum of a few of the technical work. Yes? Often you are doing a minimum of some of the management work. Yes? As the owner of the company you are due a sensible earnings. Yes? If you are all three of these in one, you need to consider one wage as due you for your time and proficiency as the service technician and manager along with a revenue of fifteen to thirty percent due you as the owner. Be sure to include a reasonable expense for your technical and supervisory work in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the method used by many auto mechanics (it is called "the flat rate book") and other service providers. This method is where you figure out a set rate for numerous tasks and charge that rate no matter what. He makes more if the mechanic invests less time than set aside for the job. He makes less if he invests more time than designated. In the end, it all evens out (well, usually to the mechanics' favor if you ask me). Another example utilizing this approach is how handled health care has used this system with healthcare facilities and physicians . Lawyers can utilize this system if they prefer.
The " Guideline of Three" in Law Practice Management Prices
This " general rule" called the "rule of 3" utilized 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 consider it and they will like it. To start we are going to be believing in thirds. For the first third we will take the total amount of salaries/bonuses (not benefits just incomes-- benefits go into the 2nd 3rd following) for the earnings generators and/or timekeepers (this includes you if you are producing revenue) and call that our first 3rd. Add up the wages of the attorneys, paralegals, and legal secretaries who produce income or are timekeepers and call this your first 3rd (lets simply say that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" ( hence that second third is $100,000 and don't forget you if you are doing some handling partner type duties since that part of your time goes here in overhead). Then take that exact same number and we will call that your last third, which we will call gross earnings (another $100,000). What you need to do is take the overall quantity (in this example $300,000) and now figure out just how much you need to charge per billable hour, per repaired rate or the number of contingency charge cases won to be sure you struck the target we should strike provided our first third number times three (in this example $300,000).
This approach shows 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 confusing do feel complimentary to contact me and I will assist you sort it out in a few minutes on the phone.
It is a excellent idea to think through all of these rates techniques in determining your law practice management pricing strategy prior to setting a price and moving ahead with a law firm marketing strategy to guarantee you are thoroughly exploring all alternatives. In another post I will tell you how to speak to possible customers so you never have a issue getting the cost you deserve.