Law Practice Management-- How To Determine Your Costs
Determining fees is a difficult law practice management task for most lawyers when thinking through their law office marketing strategies. In identifying fees for particular services, attorneys often fall short of what they should charge. Too many attorneys hesitate of even charging the competitive rate for their services when making their law office marketing plans. Even more, they make the pricing choices often with no data or conceptual structure. Additionally, rather of focusing their efforts on how they can justify getting leading dollar for what they provide, they charge a fee that is frequently way too low and often in fact can scare off possible clients who believe there is something missing out on from a service that is " low-cost". Furthermore lots of attorneys do not realize that many purchasers in the market by far are " worth buyers" and not trying to find "cheap".
Prior to you sit down and begin believing through your law practice management prices strategy you require some distinctions around pricing frequently utilized in law firm marketing preparation. Do know a law practice management law company marketing plan is not efficient if you only attract people who want to pay the least expensive cost for a service. Instead, you desire to focus your law practice management and law firm marketing plans on drawing in clients who will end up being long term properties to the firm.
There are basically 4 ways of figuring out just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one excellent way of figuring out pricing. Get your assistant to support you in this law practice management task and invest a long time finding what the variety of pricing is in the neighborhood. Have her do a "mystery shopper" study by calling around as if he/she were a prospective client and learn what your rivals state on the phone to her around pricing. She may need to call from her home phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and provide to exchange your charges for their costs or you could do that with other attorneys yourself in your market. If you truly wish to get into it and have maximum data you can write perhaps a couple of dozen rivals in your marketplace and state you are doing a charge study and if they would send you their cost list you will produce 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 location. Now you will see what people are charging for services comparable to those you use. You should be able to come up helpful hints with a series of costs. Utilize this variety to set costs for your own services. My suggestion in law practice marketing planning is to charge at the 75% level of the list. So you ought to be at or in the leading 25% of the fees.
Keep in mind that in general it is not a good law practice management strategy to compete on cost. A lot of prospective customers will see prices that is too low as a signal that there is something missing either from the service, the company, or the firm.
The Expense Method in Law Practice Management Pricing
This law practice management rates technique is really straightforward truly. The most typical mistake in law practice management using this approach is to overlook to consist of some kind of your expense.
In law practice management often you count yourself out of the expenses and you ought to include yourself in the costs. Often you are doing at least some of the management work. If you are all three of these in one, you should try this website think about one wage as due you for your time and expertise as the technician and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the method utilized by many auto mechanics (it is called "the flat rate book") and other company. This approach is where you determine a fixed rate for different tasks and charge that rate no matter what. If the mechanic invests less time than allotted for the job, he makes more. He makes less if he spends more time than allotted. However in the end, everything evens out (well, usually to the mechanics' favor if you ask me). Another example using this method is how handled health care has utilized this system with doctors and healthcare facilities . If they want, attorneys can utilize this system.
The "Rule of Three" in Law Practice Management Pricing
This "rule of thumb" called the "rule of three" utilized in law practice management is not what your CPA might inform you and it does not fail you either. For the first 3rd we will take the overall amount of salaries/bonuses (not advantages just salaries-- benefits go into the second third coming next) for the revenue generators and/or timekeepers (this includes you if you are generating income) and call that our very first 3rd. What you require to do is take the total quantity (in this example $300,000) and now figure out their explanation how much you need to charge per billable hour, per fixed rate or how many contingency fee cases won to be sure you hit the target we should hit provided 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 deserve a reasonable revenue as well don't you concur? If this technique is a bit too complicated do feel free to contact me and I will help you arrange it out in a few minutes on the phone.
It is a good idea to think through all of these prices techniques in determining your law practice management rates technique prior to setting a cost and moving ahead with a law company marketing strategy to guarantee you are thoroughly exploring all choices. In another article I will tell you how to speak to prospective clients so you never ever have a issue getting the fee you deserve.