Law Practice Management-- How To Identify Your Fees
Figuring out costs is a hard law practice management job for most lawyers when believing through their law firm marketing plans. In determining costs for particular services, lawyers frequently fall short of what they ought to charge. Too many attorneys are scared of even charging the competitive rate for their services when making their law company marketing plans.
Prior to you sit down and begin thinking through your law practice management pricing method you need some differences around prices typically used in law firm marketing preparation. Then include your pricing method to your law practice marketing plans. You need to be sure that you are charging a enough charge on whatever to ensure you a good earnings not just a good living. If you only draw in people who want to pay the most affordable cost for a service, do know a law practice management law firm marketing strategy is not effective. These are not faithful customers. Instead, you want to focus your law practice management and law office marketing plans on drawing in customers who will end up being long term assets to the company. Low rate clients are not constructing your base of long term customers I can assure you that.
There are generally 4 methods of figuring out just 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 pricing. Get your assistant to support you in this law practice management task and invest a long time finding what the series of prices is in the community. Have her do a " secret buyer" study by calling around as if he/she were a prospective customer and learn what your rivals say on the phone to her around pricing. She may require to call from her home phone to avoid caller ID. As another alternative you might have him/her call other assistants or paralegals at your competitors and offer to exchange your costs for their charges or you could do that with other lawyers yourself in your market. If you really want to enter it and have optimal data you can compose perhaps a few lots competitors in your market and say you are doing a fee study and if they would send you their fee list you will create a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it simple for them include 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 comparable to those you offer. You need to have the ability to develop a variety of rates. Utilize this variety 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.
Remember that in general it is not a excellent law practice management technique to contend on price. A lot of potential clients will see prices that is too low as a signal that there is something missing out on either from the service, the service provider, or the company.
The Expense Technique in Law Practice Management Rates
This law practice management pricing technique is really simple really. One simply determines what the costs are to deliver services or products and adds on a affordable earnings, someplace in between fifteen percent at the least and possibly thirty three percent at the most. The most common mistake in law practice management using this method is to overlook to include some type of your expenditure. Solo and little company lawyers tend to not include their own income!
OK, let me say it once again. In law practice management frequently you count yourself out of the expenses and you need to include yourself in the costs. Why? Often you are doing a minimum of some of the technical work. Yes? Typically you are doing at least a few of the management work. Yes? As the owner of the company you are due a reasonable earnings. Yes? If you are all three of these in one, you need to consider one wage as due you for your time and competence as the professional and manager along with a revenue of fifteen to thirty percent due you as the owner. So be sure to include a affordable cost for your managerial and technical operate in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the approach utilized by many car mechanics (it is called "the flat rate book") and other provider. This approach is where you determine a fixed rate for various jobs and charge that rate no matter what. If the mechanic spends less time than allocated for the task, he makes more. If he spends more time than designated, he makes less. In the end, it all evens out (well, typically to the mechanics' favor if you page ask me). Another example using this method is how managed health care has actually utilized this system with medical facilities and physicians . If they prefer, lawyers can utilize this system.
The " Guideline of Three" in Law Practice Management Pricing
This " guideline of thumb" called the "rule of three" 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 total amount of salaries/bonuses (not benefits just wages-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are creating revenue) and call that our very first 3rd. What you require to do is take the overall 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 charge cases won to be sure you struck the target we must hit provided our very first third number times three (in this example $300,000).
This method reveals you how much per hour you require 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 free to contact me and I will assist you arrange it out in a few minutes on the phone.
It is a great concept to think through all of these prices approaches in identifying your law practice management pricing technique before setting a price and continuing with a law office marketing strategy to guarantee you are completely checking out all choices. Remember the propensity for many lawyers is to price too low. Don't do that! In another post I will tell you how to speak with prospective customers so you never have a problem getting the fee you deserve.