Law Practice Management-- How To Identify Your Costs
When believing through their law firm marketing plans, identifying charges is a hard law practice management task for most attorneys. In determining fees for certain services, attorneys often disappoint what they ought to charge. When making their law firm marketing plans, too many attorneys are afraid of even charging the competitive rate for their services. Even more, they make the prices choices frequently with no information or conceptual structure. 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 typically really can frighten possible clients who believe there is something missing out on from a service that is " low-cost". In addition lots of attorneys do not understand that many buyers in the market by far are " worth buyers" and not searching for "cheap".
Before you sit down and begin thinking through your law practice management prices technique you require some distinctions around pricing commonly used in law company marketing planning. Then include your prices strategy to your law company marketing plans. You require to be sure that you are charging a sufficient charge on whatever to guarantee you a excellent earnings not just a excellent living. If you just attract people who want to pay the least expensive charge for a service, do know a law practice management law firm marketing strategy is not effective. These are not devoted clients. Rather, you wish to focus your law practice management and law practice marketing intend on bring in customers who will end up being long term assets to the firm. Low price customers are not constructing your base of long term clients I can assure you that.
There are generally 4 methods of figuring out just how much you must be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Pricing
This is one great way of determining rates. Get your assistant to support you in this law practice management job and invest some time discovering what the range of rates is in the neighborhood. Have her do a "mystery consumer" study by calling around as if he/she were a potential customer and discover what your competitors say on the phone to her around pricing. She might need to call from her home phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and provide to exchange your costs for their fees or you could do that with other legal representatives yourself in your market. If you actually wish to enter it and have optimal data you can compose possibly a couple of lots competitors in your marketplace and say you are doing a fee study and if they would send you their cost list you will produce a composite list that does not identify 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 used in your practice location. Now you will see what people are charging for services comparable to those you provide. You must have the ability to create a variety of costs. Use this variety to set prices for your own services. My suggestion in law practice marketing planning is to charge at the 75% level of the list. So you need to be at or in the top 25% of the charges.
Keep in mind that in general it is not a excellent law practice management technique to complete on price. The majority of prospective customers will see prices that is too low as a signal that there is something missing either from the service, the supplier, or the firm. And individuals who are looking for a low cost will follow that low rate anywhere they can discover it instead of becoming long-term customers. So make sure that your rate covers your costs and a reasonable revenue margin.
The Expense Method in Law Practice Management Pricing
This law practice management prices technique is extremely simple truly. The most common error in law practice management utilizing this technique is to disregard to include some form of your expenditure.
OK, let me state it once again. In law practice management frequently you count yourself out of the costs and you must include yourself in the costs. Why? Often you are doing at least a few of the technical work. Yes? Frequently you are doing a minimum of some of the management work. Yes? As the owner of business you are due a affordable revenue. Yes? If you are all three of these in one, you need to think about one salary as due my link you for your time and know-how as the service technician and supervisor along with a revenue of fifteen to thirty percent due you as the owner. Be sure to include a affordable cost for your technical and managerial work in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the technique used by many car mechanics (it is called "the flat rate book") and other service companies. This technique is where you figure out a set rate for numerous tasks and charge that rate no matter what. Another example using this method is how managed health care has used this system with healthcare facilities and medical professionals .
The " Guideline of 3" in Law Practice Management Prices
This " guideline of thumb" called the "rule of 3" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the first 3rd we will take the total quantity of salaries/bonuses (not advantages just incomes-- advantages go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you go are generating profits) and call that our first 3rd. What you require to do is take the total quantity (in this example $300,000) and now figure out how much you must charge per billable hour, per repaired rate or how many contingency charge cases won to be sure you struck the target we must strike given our first 3rd number times 3 (in this example $300,000).
This method shows you how much per hour you need to charge. If you are the owner of the practice you are worthy of a reasonable revenue as well do not you agree? If this technique is a bit too confusing do feel totally free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent idea to believe through all of these pricing approaches in identifying your law practice management prices technique before setting a rate and moving ahead with a law company marketing plan to ensure you are thoroughly checking out all choices. In another post I will tell you how to speak to possible customers so you never ever have a issue getting the charge you deserve.