Identifying fees is a tough law practice management task for most lawyers when thinking through their law firm marketing plans. In identifying charges for particular services, lawyers often fall short of what they need to charge. Too numerous lawyers are scared of even charging the competitive cost for their services when making their law firm marketing strategies.
So before you sit down and begin thinking through your law practice management pricing technique you need some distinctions around pricing frequently utilized in law firm marketing planning. Then add your rates strategy to your law practice marketing strategies. You need to be sure that you are charging a adequate charge on everything to guarantee you a excellent revenue not simply a good living. Do know a law practice management law office marketing plan is ineffective if you only bring in people who wish to pay the most affordable charge for a service. These are not loyal clients. Instead, you want to focus your law practice management and law office marketing plans on drawing in clients who will become long term assets to the company. Low rate clients are not developing your base of long term clients I can assure you that.
There are basically 4 ways of determining how much you should be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Rates
This is one great way of determining prices. Get your assistant to support you in this law practice management job and spend some time finding what the variety of pricing is in the community. Have her do a "mystery shopper" research study by calling around as if he/she were a potential client and learn what your rivals state on the phone to her around prices. She may require to call from her home phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and use to exchange your fees for their costs or you could do that with other lawyers yourself in your market. If you actually desire to get into it and have optimal data you can compose maybe a few dozen rivals in your marketplace and say you are doing a cost survey and if they would send you their cost list you will develop a composite list that does not recognize those reacting 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 provided in your practice location. Now you will see what people are charging for services similar to those you provide. You ought to have the ability to create a series of prices. Use this variety to set rates for your own services. My recommendation in law company marketing preparation is to charge at the 75% level of the list. So you must be at or in the leading 25% of the costs.
Keep in mind that in general it is not a good law practice management strategy to compete on price. The majority of prospective clients will see rates that is too low as a signal that there is something missing either from the service, the provider, or the company. And individuals who are trying to find a low price will follow that low rate wherever they can discover it rather than ending up being long-term clients. Be sure that your rate covers your expenses and a sensible revenue margin.
The Cost Approach in Law Practice Management Prices
This law practice management prices method is extremely simple truly. The most common error in law practice management using this method is to neglect to consist of some kind of your cost.
In law practice management frequently you count yourself out of the costs and you must include yourself in the expenditures. Often you are doing at least some of the management work. If you are all 3 of these in one, you must consider one wage as due you for your time and know-how as the service technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the method used by lots of car mechanics (it is called "the flat rate book") and other service companies. This method is where you figure out a fixed 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 health centers and doctors .
The " Guideline of Three" in Law Practice Management Prices
This " guideline of thumb" called the "rule of three" utilized in law practice management is not what your Certified Public Accountant may 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 wages-- advantages go into the second 3rd coming next) for the income generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first 3rd. What you need to do is take the overall quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how numerous contingency fee cases won to be sure you struck the target we should hit given our very first third number times 3 (in this example $300,000).
This method reveals you just how much per hour you require to charge. Because you understand how numerous billable hours each income generator can do per month, just divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out correctly. As long as you hit your targets you will be assured of a 15% to 30% net benefit from your operations. After all if you are the owner of the practice you deserve a reasonable earnings as well do not you concur? This technique is understood as the Rule of 3. If this method is a bit too complicated do do not hesitate to contact me and I will help you arrange it out in a few minutes on the phone.
It is a great idea to analyze all of these prices approaches in determining your law practice management pricing technique prior to setting a price and moving ahead with a law office marketing strategy to ensure you are completely checking out all alternatives. Keep in mind the tendency for most legal representatives is to price too low. Do not do that! In another post I will inform you how to speak with prospective clients so Web Site you never ever have a issue getting the fee you should have.