Identifying costs is a challenging law practice management job for a lot of attorneys when thinking through their law firm marketing plans. In determining charges for specific services, attorneys often fall short of what they ought to charge. Too lots of attorneys are afraid of even charging the competitive price for their services when making their law firm marketing plans.
So before you sit down and start believing through your law practice management rates technique you need some distinctions around pricing typically used in law practice marketing planning. Add your rates strategy to your law firm marketing strategies. You require to be sure that you are charging a adequate cost on whatever to ensure you a excellent profit not simply a excellent living. If you only bring in individuals who want to pay the least expensive cost for a service, do know a law practice management law company marketing plan is not reliable. These are not faithful customers. Instead, you wish to focus your law practice management and law office marketing intend on drawing in customers who will become long term properties to the firm. Low rate clients are not constructing your base of long term customers I can promise you that.
There are basically four methods of figuring out how much you should be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Pricing
This is one excellent way of identifying prices. Get your assistant to support you in this law practice management task and invest some time discovering what the series of pricing remains in the community. Have her do a "mystery consumer" study by calling around as if he/she were a possible customer and learn what your competitors state on the phone to her around pricing. She may require to call from her home phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and use to exchange your charges for their costs or you might do that with other lawyers yourself in your market. If you actually wish to get into it and have optimal data you can compose maybe a couple of dozen rivals in your market and say you are doing a charge study and if they would send you their charge list you will produce a composite list that does not identify those reacting and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services provided in your practice area. Now you will see what people are charging for services comparable to those you offer. You need to be able to develop a variety of rates. Use this range article source to set rates for your own services. My recommendation in law firm 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 great law practice management technique to contend on rate. Most prospective customers important link will see prices that is too low as a signal that there is something missing out on either from the service, the supplier, or the firm.
The Expense Approach in Law Practice Management Rates
This law practice management prices approach is very uncomplicated really. The most typical error in law practice management using this technique is to neglect to consist of some type of your expense.
In law practice management typically you count yourself out of the costs and you must include yourself in the costs. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you need to consider one salary as due you for your time and knowledge as the service technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the technique used by lots of vehicle mechanics (it is called "the flat rate book") and other service providers. This method is where you identify a fixed rate for different 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 doctors .
The "Rule of Three" in Law Practice Management Prices
This " guideline of thumb" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the first third we will take the total amount of salaries/bonuses (not benefits simply incomes-- advantages go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are producing profits) and call that our first 3rd. What you need to do is take the overall quantity (in this example $300,000) and now figure out how much you must charge per billable hour, per fixed rate or how lots of contingency fee cases won to be sure you hit the target we should hit given our very first 3rd number times 3 (in this example $300,000).
This technique reveals you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable profit as well don't you concur? If this approach is a bit too confusing do feel free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a good concept to believe through all of these pricing approaches in identifying your law practice management prices strategy before setting a rate and moving ahead with a law office marketing strategy to ensure you are completely checking out all alternatives. Remember the propensity for many attorneys is to price too low. Don't do that! In another post I will inform you how to speak with possible clients so you never ever have a problem getting the cost you should have.