Identifying charges is a tough law practice management task for a lot of attorneys when believing through their law office marketing plans. In identifying fees for specific services, lawyers typically fall brief of what they ought to charge. When making their law company marketing strategies, too numerous attorneys are afraid of even charging the competitive cost for their services. Further, they make the rates decisions often with no data or conceptual framework. Furthermore, instead of focusing their efforts on how they can validate getting leading dollar for what they offer, they charge a fee that is frequently way too low and often in fact can frighten off potential customers who think there is something missing out on from a service that is " inexpensive". In addition many lawyers do not understand that a lot of purchasers in the marketplace by far are " worth purchasers" and not searching for " inexpensive".
Before you sit down and begin thinking through your law practice management rates technique you need some differences around prices typically utilized in law firm marketing preparation. Do know a law practice management law company marketing plan is not efficient if you only draw in individuals who desire to pay the least expensive fee for a service. Rather, you desire to focus your law practice management and law company marketing strategies on drawing in clients who will become long term properties to the company.
There are essentially 4 methods of determining how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one great way of identifying prices. Get your assistant to support you in this law practice management task and invest a long time discovering what the range of rates is in the community. Have her do a "mystery shopper" study by calling around as if he/she were a possible client and discover out what your rivals state on the phone to her around pricing. She may need to call from her house phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your competitors and use to exchange your fees for their fees or you could do that with other legal representatives yourself in your market. If you actually want to get into it and have optimal data you can write perhaps a couple of dozen competitors in your marketplace 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 results. To keep it simple for them include a stamped, self-addressed envelope with a list of the most typical services offered in your practice location. Now you will see what individuals are charging for services comparable to those you provide. You ought to have the ability to develop a series of prices. Use this range to set rates for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. So you should be at or in the leading 25% of the fees.
Remember page that in basic it is not a excellent law practice management method to compete on cost. A lot of potential customers will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the company.
The Expense Technique in Law Practice Management Prices
This law practice management pricing technique is extremely straightforward actually. One just determines what the expenses are to deliver services or products and adds on a reasonable profit, somewhere in between fifteen percent at the least and possibly thirty three percent at the most. The most typical error in law practice management using this technique is to neglect to consist of some type of your expenditure. Solo and small firm attorneys tend to not include their own wage!
OK, let me say it once again. In law practice management often you count yourself out of the expenses and you should include yourself in the expenses. Why? Typically you are doing at least a few of the technical work. Yes? Often you are doing at least a few of the management work. Yes? As the owner of business you are due a affordable profit. Yes? If you are all 3 of these in one, you must think about one income as due you for your time and know-how as the specialist and manager as well as 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 Technique in Law Practice Management Prices
This is the approach used by many automobile mechanics (it is called "the flat rate book") and other provider. This method is where you determine a fixed rate for various 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 designated, he earns less. However in the end, everything levels (well, normally to the mechanics' favor if you ask me). Another example utilizing this approach is how handled health care has utilized this system with medical professionals and healthcare facilities . Lawyers can use this system if they want.
The "Rule of 3" in Law Practice Management Prices
This " general rule" called the " guideline of 3" utilized in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your Certified Public Accountant what they think of it and they will like it. To begin we are going to be thinking in thirds. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits just wages-- advantages enter into the 2nd 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are creating profits) and call that our first 3rd. So include up the incomes of the lawyers, paralegals, and legal secretaries who produce revenue or are timekeepers and call this your first 3rd (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" ( therefore that second third is $100,000 and do not forget you if you are doing some handling partner type responsibilities since that part of your time goes here in overhead). Take that same number and we will call that your last 3rd, which we will call gross profits (another $100,000). What you require to do is take the overall amount (in this example $300,000) and now determine just how much you need to charge per billable hour, per repaired rate or the number of contingency cost cases won to be sure you hit the target we must hit provided our first third number times three (in this example $300,000).
This technique reveals you how much per hour you need to charge. If you are the owner of the practice you should have a fair revenue as well don't you agree? If this approach is a bit too confusing do feel totally free to call me and I will assist you sort it out in a couple of minutes on the phone.
It is a good idea to analyze all of these pricing methods in determining your law practice management rates strategy before setting a rate and continuing with a law practice marketing plan to ensure you are completely checking out all choices. Remember the propensity for the majority of attorneys is to price too low. Do not do that! In another post I will inform you how to speak to prospective customers so you never ever have a issue getting the cost you should have.