Identifying costs is a tough law practice management job for most attorneys when thinking through their law office marketing strategies. In determining charges for particular services, lawyers often disappoint what they should charge. When making their law company marketing strategies, too lots of attorneys are scared of even charging the competitive price for their services. Further, they make the rates decisions often without any data or conceptual framework. In addition, instead of focusing their efforts on how they can validate getting top dollar for what they use, they charge a charge that is often way too low and frequently actually can frighten prospective customers who think there is something missing from a service that is "cheap". Furthermore lots of lawyers do not understand that most buyers in the market without a doubt are " worth purchasers" and not looking for "cheap".
Before you sit down and begin thinking through your law practice management pricing technique you require some differences around rates commonly used in law company marketing planning. Do understand a law practice management law company marketing strategy is not efficient if you only bring in individuals who desire to pay the most affordable fee for a service. Instead, you desire to focus your law practice management and law company marketing strategies on drawing in customers who will end up being long term assets to the firm.
There are generally four methods of identifying how much you need to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Rates
This is one excellent way of determining rates. Get your assistant to support you in this law practice management task and invest a long time finding what the variety of rates is in the neighborhood. Have her do a "mystery shopper" study by calling around as if he/she were a potential customer and find out what your rivals say on the phone to her around rates. She might need to call from her home phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and offer to exchange your costs for their fees or you could do that with other lawyers yourself in your market. If you actually want to get into it and have optimal information you can write possibly a couple of dozen rivals in your marketplace and state you are doing a cost study and if they would send you their charge list you will develop a composite list that does not identify those reacting and send them a copy of the results. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services provided in your practice area. Now you will see what people are charging for services similar to those you use. You must be able to come up with a variety of prices. Utilize this range to set rates for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. So you need to be at or in the top 25% of the charges.
Keep in mind that in basic it is not a good law practice management strategy to complete on cost. A lot of potential clients will see pricing that is too low as a signal that there is something missing out on either from the service, the provider, or the firm.
The Expense Method in Law Practice Management Prices
This law practice management rates method is extremely simple truly. One merely determines what the expenses are to provide products or services and adds on a affordable revenue, somewhere in between fifteen her latest blog percent at the least and perhaps thirty 3 percent at the most. The most typical mistake in law practice management using this method is to disregard to consist of some type of your expense. Solo and little company lawyers tend to not include their own salary!
OK, let me state it again. In law practice management typically you count yourself out of the expenses and you should include yourself in the expenditures. Why? Typically you are doing at least a few of the technical work. Yes? Typically you are doing at least a few of the management work. Yes? As the owner of business you are due a reasonable profit. Yes? If you are all three of these in one, you ought to consider one income as due you for your time and knowledge as the professional and manager as well as a revenue of fifteen to thirty percent due you as the owner. So make certain to consist of a reasonable expense for your managerial and technical work in the costs part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the technique used by lots of auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you determine a set rate for various jobs and charge that rate no matter what. Another example using this approach is how managed health care has actually used this system with healthcare facilities and doctors .
The "Rule of Three" in Law Practice Management Rates
This "rule of thumb" called the " guideline of three" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. Ask your CPA what they believe about it and they will like it. To start we are going to be believing in thirds. For the very first third we will take the overall quantity of salaries/bonuses (not benefits simply wages-- benefits go into the 2nd 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are creating income) and call that our first third. Include up the salaries of the lawyers, paralegals, and legal secretaries who generate income or are timekeepers and call this your very first 3rd (lets simply say that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your second third which we will call your "overhead" ( hence that second third is $100,000 and don't forget you if you are doing some managing partner type tasks because that part of your time goes here in overhead). Take that same number and we will call that your last 3rd, which we will call gross earnings (another $100,000). What you need to do is take the overall quantity (in this example $300,000) and now find out how much you must charge per billable hour, per repaired rate or how numerous contingency charge cases won to be sure you struck the target we must strike offered our first 3rd number times three (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 do not you concur? If this method is a bit too confusing do feel totally free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to believe through all of these rates methods in determining your law practice management pricing method before setting a cost and moving ahead with a law firm marketing plan to ensure you are completely checking out all options. In another short article I will tell you how to speak to possible customers so you never have a problem getting the fee you deserve.