Law Practice Management-- How To Determine Your Charges
Figuring out costs is a tough law practice management task for the majority of attorneys when analyzing their law office marketing plans. In determining charges for certain services, lawyers typically fall short of what they need to charge. When making their law company marketing strategies, too numerous lawyers are scared of even charging the competitive price for their services. Even more, they make the pricing choices typically without any data or conceptual framework. In addition, rather of focusing their efforts on how they can validate getting top dollar for what they use, they charge a fee that is frequently way too low and often really can frighten possible clients who believe there is something missing out on from a service that is " low-cost". Additionally lots of lawyers don't understand that most buyers in the market by far are "value purchasers" and not searching for " low-cost".
Prior to you sit down and start thinking through your law practice management pricing strategy you require some distinctions around rates frequently utilized in law company marketing preparation. Do know a law practice management law firm marketing strategy is not efficient if you just attract individuals who want to pay the lowest charge for a service. Rather, you want to focus your law practice management and law firm marketing strategies on drawing in customers who will become long term possessions to the company.
There are basically four methods of determining just how much you need to be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
This is one great way of determining pricing. Get your assistant to support you in this law practice management task and invest a long time finding what the range of prices remains in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a possible customer and discover out what your competitors say on the phone to her around prices. She may need to call from her house phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your competitors and provide to exchange your charges for their charges or you might do that with other legal representatives yourself in your market. If you really wish to get into it and have optimal information you can write perhaps a few dozen competitors in your market and state you are doing a charge survey and if they would send you their cost 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 typical services provided in your practice area. Now you will see what individuals are charging for services similar to those you offer. You need to have the ability to develop a series of prices. Use this range to set costs for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. So you need to be at or in the leading 25% of the costs.
Remember that in general it is not a excellent law practice Learn More management method to complete on cost. A lot of prospective customers will see pricing that is too low as a signal that there is something missing either from the service, the service provider, or the firm.
The Expense Technique in Law Practice Management Pricing
This law practice management prices approach is extremely simple really. The most typical error in law practice management using this approach is to neglect to include some type of your expenditure.
see page OK, let me state it once again. In law practice management frequently you count yourself out of the expenditures and you need to include yourself in the expenses. Why? Typically you are doing a minimum of a few of the technical work. Yes? Frequently you are doing at least a few of the management work. Yes? As the owner of business you are due a sensible revenue. Yes? If you are all three of these in one, you must consider one salary as due you for your time and competence as the professional and supervisor as well as a earnings of fifteen to thirty percent due you as the owner. Be sure to include a reasonable expense for your technical and managerial work in the expenses part of this formula.
Fixed Rate Approach in Law Practice Management Pricing
This is the technique utilized by many car mechanics (it is called "the flat rate book") and other provider. This method is where you figure out a fixed rate for numerous jobs and charge that rate no matter what. He makes more if the mechanic spends less time than allocated for the job. If he spends more time than allotted, he makes less. However in the end, all of it levels (well, normally to the mechanics' favor if you ask me). Another example utilizing this method is how managed healthcare has actually used this system with hospitals and medical professionals . If they want, attorneys can utilize this system.
The "Rule 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 inform you and it does not fail you either. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits just incomes-- benefits go into the 2nd third coming next) for the revenue 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 overall quantity (in this example $300,000) and now figure out how much you must charge per billable hour, per fixed rate or how lots of contingency fee cases won to be sure you hit the target we need to strike given our first third number times 3 (in this example $300,000).
This method reveals you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable revenue as well do not you concur? If this technique is a bit too confusing do feel free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a great idea to think through all of these rates techniques in identifying your law practice management prices strategy prior to setting a rate and moving ahead with a law firm marketing strategy to ensure you are completely checking out all choices. In another post I will tell you how to speak to possible clients so you never ever have a problem getting the charge you should have.