Figuring out costs is a challenging law practice management job for a lot of attorneys when analyzing their law company marketing plans. In figuring out costs for specific services, attorneys typically disappoint what they ought to charge. When making their law firm marketing plans, too numerous lawyers are afraid of even charging the competitive cost for their services. Even more, they make the prices decisions frequently without any data or conceptual structure. In addition, rather 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 typically really can scare off possible clients who think there is something missing out on from a service that is " low-cost". Furthermore lots of lawyers do not realize that most buyers in the market by far are "value buyers" and not searching for " inexpensive".
Prior to you sit down and start thinking through your law practice management prices method you require some differences around prices commonly used in law company marketing preparation. Do understand a law practice management law company marketing strategy is not efficient if you only attract individuals who want to pay the lowest fee for a service. Rather, you want to focus your law practice management and law firm marketing strategies on drawing in customers who will end up being long term assets to the company.
There are generally four ways of identifying just how much you must be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Rates
This is one excellent way of figuring out rates. Get your assistant to support you in this law practice management task and invest a long time finding what the variety of pricing is in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a potential client and discover what your competitors say on the phone to her around rates. She may need to call from her house phone to prevent caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and use to exchange your fees for their charges or you might do that with other legal representatives yourself in your market. If you truly wish to get into it and have maximum information you can write perhaps a few lots rivals in your market and state you are doing a charge study and if they would send you their charge list you will develop a composite list that does not identify those responding and send them a copy of the results. To keep it easy for them include a stamped, self-addressed envelope with a list of the most typical services used in your practice area. Now you will see what people are charging for services comparable to those you provide. You must have the ability to come up with a variety of rates. Use this variety to set prices for your own services. My recommendation in law office 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 costs.
Remember that in general it is not a great law practice management strategy to compete on rate. Most prospective clients will see rates that is too low as a signal that there is something missing either from the service, the supplier, or the firm.
The Expense Technique in Law Practice Management Prices
This law practice management pricing method is very straightforward really. The most common mistake in law practice management using this technique is to disregard to consist of some form of your expense.
OK, let me say it once again. In law practice management typically you count yourself out of the costs and you should include yourself in the expenditures. Why? Frequently you are doing at least some of the technical work. Yes? Often you are doing a minimum of a few of the management work. Yes? As the owner of the business you are due a affordable profit. Yes? If you are all three of these in one, you must consider one salary as due you for your time and knowledge as the specialist and supervisor in addition to a earnings of fifteen to thirty percent due you as the owner. Be sure to include a affordable expense for your supervisory and technical work in the expenditures part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the approach utilized by numerous vehicle mechanics (it is called "the flat rate book") and other provider. This approach is where you identify a set rate for various jobs and charge that rate no matter what. He makes more if the mechanic spends less time than allocated for the task. He makes less if he invests more time than allocated. In the end, it all evens out (well, normally to the mechanics' favor if you ask me). Another example utilizing this approach is how handled healthcare has actually used this system with hospitals and physicians . If they prefer, lawyers can utilize this system.
The " Guideline of Three" in Law Practice Management Pricing
This " general rule" called the "rule of three" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your CPA what they think of it and they will like it. To start we are going to be thinking in thirds. For the first third we will take the total quantity of salaries/bonuses (not advantages just salaries-- benefits enter into the second 3rd following) for the profits generators and/or timekeepers (this includes you if you are producing income) and call that our very first 3rd. Include up the incomes of the attorneys, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your very first 3rd (lets simply state 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" (thus that second 3rd is $100,000 and do not forget you if you are doing some handling partner type tasks because that part of your time goes here in overhead). Take that same number and we will call that your last third, which we will call gross revenues (another $100,000). What you need to do is take the overall amount (in this example $300,000) and now figure out just how much you must charge per billable hour, per fixed rate or how many contingency charge cases won to be sure you struck the target we need to hit provided our very first third number times three (in this example $300,000).
This method shows you how much per hour you require to charge. If you are the owner of the practice you deserve a fair revenue as well don't you agree? If this technique is a bit too confusing do feel free to contact me and I will assist you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these pricing approaches in identifying your law practice management prices strategy before setting a cost and moving ahead with a law company marketing strategy to ensure you are completely checking out all options. In another post I will tell you how to speak to prospective clients so you never have a problem getting the fee you learn this here now deserve.