Law Practice Management-- How To Identify Your Charges
Determining charges is a tough law practice management task for the majority of attorneys when thinking through their law company marketing plans. In determining costs for specific services, lawyers frequently fall brief of what they ought to charge. Too many attorneys are afraid of even charging the competitive rate for their services when making their law firm marketing strategies.
So prior to you sit down and begin analyzing your law practice management rates method you need some differences around rates commonly used in law office marketing planning. Add your pricing technique to your law company marketing plans. You need to be sure that you are charging a sufficient fee on everything to ensure you a excellent earnings not simply a great living. If you only attract individuals who want to pay the most affordable cost for a service, do know a law practice management law company marketing strategy is not effective. These are not loyal customers. Rather, you wish to focus your law practice management and law firm marketing strategies on bring in clients who will become long term properties to the firm. Low price customers are not building your base of long term customers I can assure you that.
There are generally 4 methods of identifying just how much you should be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one great method of determining prices. Get your assistant to support you in this law practice management task and invest some time finding what the series of prices is in the community. Have her do a " secret shopper" study by calling around as if he/she were a potential customer and find out what your rivals say on the phone to her around pricing. She might need to call from her home phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and provide to exchange your fees for their charges or you could do that with other lawyers yourself in your market. If you really want to get into it and have maximum data you can write maybe a few dozen competitors in your marketplace and say you are doing a fee survey and if they would send you their fee list you will produce a composite list that does not identify those responding 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 typical services used 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 series of costs. Use this range to set prices for your own services. My recommendation 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 charges.
Keep in mind that in basic it is not a great law practice management technique to complete on price. The majority of prospective customers will see pricing 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 cost will follow that low rate any place they can discover it rather than ending up being long-lasting customers. So make sure that your price covers your costs and a reasonable profit margin.
The Expense Method in Law Practice Management Prices
This law practice management pricing technique is extremely simple really. One simply identifies what the expenses are to provide services or items and adds on a affordable profit, somewhere in between fifteen percent at the least and maybe thirty three percent at the most. The most typical error in law practice management using this technique is to neglect to consist of some kind of your expenditure. Solo and little firm attorneys tend to not include their own income!
In law practice management typically you count yourself out of the costs and you ought to include yourself in the expenses. Frequently you are doing at least some of the this contact form management work. If you are all three of these in one, you ought to think about one salary as due you for your time and expertise as the technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the technique 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 different tasks and charge that rate no matter what. Another example using this technique is how handled health care has utilized this system with doctors and healthcare facilities .
The " Guideline of Three" in Law Practice Management Prices
This "rule basics of thumb" called the "rule of 3" 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 wages-- advantages go into the 2nd 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are producing profits) and call that our very first third. What you need to do is take the overall amount (in this example $300,000) and now figure out how much you should charge per billable hour, per repaired rate or how lots of contingency charge cases won to be sure you struck the target we must hit given our first third number times 3 (in this example $300,000).
This method shows you how much per hour you need to charge. Because you know the number of billable hours each earnings generator can do each month, merely divide that into your total of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out properly. As long as you strike your targets you will be ensured of a 15% to 30% net profit from your operations. After all if you are the owner of the practice you deserve a reasonable earnings too do not you concur? This technique is called the Guideline of 3. If this technique is a bit too complicated do do not content hesitate to contact me and I will assist you arrange it out in a couple of minutes on the phone.
It is a good idea to believe through all of these rates methods in identifying your law practice management rates strategy prior to setting a rate and moving ahead with a law firm marketing plan to guarantee you are thoroughly exploring all choices. In another post I will tell you how to speak to prospective customers so you never ever have a problem getting the fee you are worthy of.