Determining costs is a difficult law practice management job for most lawyers when thinking through their law firm marketing plans. In identifying fees for certain services, attorneys frequently fall brief of what they must charge. Too many lawyers are scared of even charging the competitive rate for their services when making their law firm marketing plans.
Before you sit down and begin thinking through your law practice management pricing strategy you require some distinctions around pricing frequently utilized in law company marketing planning. Do know a law practice management law firm marketing strategy is not effective if you just attract individuals who want to pay the lowest fee for a service. Instead, you want to focus your law practice management and law company marketing strategies on drawing in customers who will end up being long term properties to the firm.
There are basically 4 methods of identifying how much you need to 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 task and invest some time finding what the variety of rates is in the neighborhood. Have her do a " secret consumer" research study by calling around as if he/she were a potential customer and discover what your rivals state on the phone to her around prices. She might need to call from her home phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their fees or you might do that with other legal representatives yourself in your market. If you actually wish to get into it and have maximum data you can compose possibly a couple of dozen competitors in your market and say you are doing a cost study and if they would send you their cost list you will develop a composite list that does not determine those responding and send them a copy of the outcomes. To keep it basic for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what individuals are charging for services comparable to those you offer. You must be able to come up with a variety of rates. Utilize this variety to set costs for your own services. My recommendation in law practice marketing preparation is to charge at the 75% level of the list. So you need to be at or in the top 25% of the costs.
Remember that in basic it is not a great law practice management strategy to contend on rate. Most prospective clients will see prices that is too low as a signal that there is something missing either from the service, the supplier, or the company.
The Cost Method in Law Practice Management Pricing
This law practice management prices technique is extremely simple truly. One just identifies what the expenses are to provide product and services and adds on a affordable earnings, someplace in between fifteen percent at the least and perhaps thirty 3 percent at web the most. The most common mistake in law practice management using this technique is to disregard to include some type of your expense. Solo and little company attorneys tend to not include their own salary!
OK, let me state it again. In law practice management often you count yourself out of the costs and you must include yourself in the costs. Why? Often you are doing at least some of the technical work. Yes? Typically you are doing a minimum of some of the management work. Yes? As the owner of business you are due a sensible earnings. Yes? If you are all three of these in one, you ought to consider one income as due you for your time and know-how as the technician and supervisor along with a earnings of fifteen to thirty percent due you as the owner. So be sure to consist of a affordable cost for your technical and supervisory work in the costs part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the method utilized by numerous automobile mechanics (it is called "the flat rate book") and other service companies. This method is where you identify a set rate for different tasks and charge that rate no matter what. Another example using this technique is how managed health care has used this system with physicians and medical facilities .
The "Rule of Three" in Law Practice Management Pricing
This " guideline of thumb" called the "rule of 3" utilized in law practice management is not what your CPA may tell you and it does not fail you either. For the very first third we will take the overall quantity of salaries/bonuses (not benefits just wages-- benefits go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are creating income) and call that our very first third. What you require to do is take the overall amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how numerous contingency cost cases won to be sure you hit the target we should strike provided our very first third number times three (in this example $300,000).
This approach reveals you how much per hour you need to charge. If you are the owner of the practice you are worthy of a reasonable earnings as well do not you agree? If this technique is a bit too confusing do feel totally free to call me and I will assist you arrange it out in a few minutes click to investigate on the phone.
It is a excellent concept to believe through all of these prices methods in identifying your law practice management prices technique prior to setting a cost and moving ahead with a law company marketing strategy to guarantee you are thoroughly checking out all alternatives. In another post I will inform you how to speak to prospective customers so you never ever have a issue getting the cost you are worthy of.