Law Practice Management-- How To Determine Your Charges
When believing through their law company marketing strategies, identifying fees is a tough law practice management task for a lot of lawyers. In determining charges for certain services, attorneys typically disappoint what they need to charge. A lot of attorneys are scared of even charging the competitive rate for their services when making their law firm marketing plans. Further, they make the prices decisions often with no data or conceptual framework. Furthermore, instead of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a fee that is frequently way too low and frequently really can frighten off prospective clients who think there is something missing from a service that is "cheap". Additionally lots of lawyers don't realize that most buyers in the marketplace without a doubt are " worth purchasers" and not trying to find " inexpensive".
Before you sit down and start thinking through your law practice management rates technique you require some distinctions around pricing commonly utilized in law company marketing preparation. Do know a law practice management law firm marketing strategy is not effective if you just bring in people who desire to pay the least expensive charge for a service. Rather, you desire to focus your law practice management and law firm marketing plans on bring in customers who will become long term possessions to the company.
There are generally four methods of figuring out just how much you should be charging for your services. Lets move right into those now.
The Market Approach 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 some time discovering what the range of rates remains in the neighborhood. Have her do a " secret consumer" study by calling around as if he/she were a prospective client and discover what your rivals state on the phone to her around prices. She may need to call from her house phone to prevent caller ID. As another alternative you might have him/her call other assistants or paralegals at your competitors and use to exchange your fees for their costs or you might do that with other attorneys yourself in your market. If you actually desire to enter into it and have optimal information you can write perhaps a few dozen rivals 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 outcomes. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services provided in your practice area. Now you will see what people are charging for services comparable to those you offer. You must be able to develop a range of rates. Use this range to set costs for your own services. My suggestion in law office marketing planning is to charge at the 75% level of the list. So you must be at or in the leading 25% of the costs.
Keep in mind that in basic it is not a great law practice management method to compete on price. Many prospective clients will see prices that is internet too low as a signal that there is something missing either from the service, the supplier, or the company. And individuals who are searching for a low price will follow that low rate any place they can find it instead of ending up being long-term customers. So make certain that your rate covers your costs and a reasonable earnings margin.
The Expense Technique in Law Practice Management Rates
This law practice management rates method is very simple truly. The most common mistake in law practice management using this method is to overlook to include some form of your expense.
OK, let me say it again. In law practice management often you count yourself out of the expenses and you should include yourself in the expenditures. Why? Typically you are doing a minimum of some of the technical work. Yes? Often you are doing at least some of the management work. Yes? As the owner of business you are due a affordable earnings. Yes? If you are all three of these in one, you should consider one income as due you for your time and proficiency as the technician and manager as well as a revenue of fifteen to thirty percent due you as the owner. So make certain to include a affordable cost for your technical and supervisory work in the expenditures part of this formula.
Fixed Rate Technique in Law Practice Management Pricing
This is the method utilized by numerous auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you determine a set rate for various jobs and charge that rate no matter what. Another example using this method is how handled health care has used this system with doctors and medical facilities .
The "Rule of 3" in Law Practice Management Rates
This "rule of thumb" 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. For the very first 3rd we will take the overall amount of salaries/bonuses (not benefits simply incomes-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are creating profits) and call that our first 3rd. What you need to do is take the total quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per repaired rate or how many contingency fee cases won to be sure you hit the target we need to strike offered our first third number times three (in this example $300,000).
This technique shows you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable earnings as well do not you concur? 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 few minutes on the phone.
It is a great idea to think through all of these prices approaches in determining your law practice management pricing strategy prior to setting a rate and moving ahead with a law firm marketing plan to guarantee you are completely exploring all options. In another post I will tell you how to speak to potential clients so you never ever have a problem getting the fee you should have.