Law Practice Management-- How To Identify Your Charges
Figuring out fees is a tough law practice management job for the majority of attorneys when thinking through their law company marketing strategies. In figuring out costs for particular services, attorneys frequently disappoint what they need to charge. When making their law firm marketing plans, too many attorneys are scared of even charging the competitive rate for their services. Further, they make the rates choices typically with no data or conceptual framework. Additionally, rather of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a cost that is frequently way too low and typically in fact can frighten possible clients who believe there is something missing from a service that is " low-cost". Additionally lots of attorneys do not realize that the majority of purchasers in the market without a doubt are "value purchasers" and not searching for " low-cost".
Before you sit down and begin thinking through your law practice management rates method you need some differences around rates frequently utilized in law firm marketing planning. Do know a law practice management law firm marketing strategy is not efficient if you just attract people who desire to pay the least expensive cost 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 just how much you need to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
This is one excellent way of determining prices. Get your assistant to support you in this law practice management job and invest some time finding what the range of prices is in the community. Have her do a "mystery 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 rivals and provide to exchange your costs for their fees or you might do that with other lawyers yourself in your market. If you really desire to get into it and have maximum information you can compose maybe a few lots rivals in your market and state you are doing a cost study and if they would send you their cost list you will create a composite list that does not identify those responding and send them a copy of the results. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice area. Now you will see what individuals are charging for services similar to those you provide. You ought to have the ability see this page to create a variety of rates. Use this range to set prices for your own services. My suggestion in law firm marketing preparation is to charge at the 75% level of the list. So you should be at or in the leading 25% of the charges.
Keep in mind that in general it is not a good law practice management technique to compete on rate. Most potential customers will see pricing that is too low as a signal that there is something missing out on either from the service, the supplier, or the company. And individuals who are trying to find a low cost will follow that low price wherever they can find it rather than ending up being long-term clients. So make sure that your rate covers your costs and a sensible revenue margin.
The Cost Approach in Law Practice Management Pricing
This law practice management rates technique is very simple actually. The most typical error in law practice management using this method is to neglect to consist of some type of your expense.
In law practice management often you count yourself out of the expenditures and you must include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you need to think about one salary as due you for your time and competence as the professional and manager as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the method used by numerous auto mechanics (it is called "the flat rate book") and other service companies. This technique is useful source where you figure out a set rate for numerous jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has actually used this system with physicians and medical facilities .
The " Guideline of 3" in Law Practice Management Pricing
This "rule of thumb" called the " guideline of 3" used in law practice management is not what your CPA may tell you and it does not fail you either. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits simply salaries-- benefits go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are creating profits) and call that our first third. What you require 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 fixed rate or how lots of contingency cost cases won to be sure you hit the target we must strike given our very first third number times 3 (in this example $300,000).
This approach reveals you how much per hour you need to charge. If you are the wikipedia reference owner of the practice you should have a fair profit as well don't you agree? If this approach is a bit too complicated do feel complimentary to contact me and I will assist you arrange it out in a couple of minutes on the phone.
It is a excellent concept to think through all of these pricing methods in determining your law practice management pricing method prior to setting a cost and moving ahead with a law firm marketing strategy to guarantee you are completely exploring all options. In another post I will inform you how to speak to potential customers so you never ever have a problem getting the cost you should have.