Law Practice Management-- How To Determine Your Charges
Figuring out fees is a challenging law practice management job for many attorneys when thinking through their law firm marketing strategies. In identifying fees for certain services, attorneys often disappoint what they ought to charge. When making their law firm marketing strategies, too numerous attorneys are afraid of even charging the competitive cost for their services. Further, they make the pricing decisions often with no information or conceptual structure. Furthermore, instead of focusing their efforts on how they can justify getting leading dollar for what they use, they charge a fee that is typically way too low and often really can frighten prospective clients who believe there is something missing from a service that is " low-cost". Furthermore many lawyers do not recognize that many purchasers in the market by far are " worth purchasers" and not looking for " inexpensive".
Prior to you sit down and start thinking through your law practice management rates strategy you need some distinctions around prices commonly utilized in law company marketing preparation. Do know a law practice management law company marketing strategy is not reliable if you just bring in people who want to pay the lowest cost for a service. Rather, you want to focus your law practice management and law firm marketing plans on attracting clients who will become long term possessions to the company.
There are basically four methods of determining just how much you ought to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Pricing
This is one excellent way of figuring out prices. Get your assistant to support you in this law practice management job and invest some time discovering what the variety of prices is in the neighborhood. Have her do a "mystery buyer" research study by calling around as if he/she were a possible customer and learn what your competitors say on the phone to her around pricing. She might 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 rivals and offer to exchange your costs for their costs or you could do that with other lawyers yourself in your market. If you truly wish to get into it and have optimal data you can write possibly a couple of lots rivals in your marketplace and state you are doing a cost study and if they would send you their fee list you will produce a composite list that does not identify those responding and send them a copy of the outcomes. To keep it simple 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 comparable to those you use. You ought to have the ability to create a range of prices. Use this variety to set prices for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the fees.
Remember that in general it is not a good law practice management strategy to contend on cost. The majority of potential customers will see pricing that is too low as a signal that there is something missing either from the service, the provider, or the firm. And people who are looking for a low price will follow that low price anywhere they can find it rather than becoming long-term customers. Be sure that your rate covers your costs and a reasonable profit margin.
The Expense Technique in Law Practice Management Prices
This law practice management prices approach is really simple actually. The most common error in law practice management utilizing this approach is to neglect to consist of some kind of your expenditure.
In law practice management often you count yourself out of the expenditures and you need to include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all three of these in one, you must consider one salary as due you for your time and proficiency as the technician and manager as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the technique used by lots of vehicle mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you determine a set rate for numerous tasks and charge that rate no matter what. Another example utilizing this approach is how handled health care has actually utilized this system with medical facilities and physicians .
The "Rule of Three" in Law Practice Management Pricing
This " general rule" called the "rule of 3" used in law practice management is not what your Certified Public Accountant might 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 first third we will take the overall amount of salaries/bonuses (not benefits simply incomes-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are creating income) and call that our first 3rd. Include up the wages of the attorneys, paralegals, and legal secretaries who generate income or are timekeepers and call this your first 3rd (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number once again and it is your second third which we will call your "overhead" (thus that second 3rd is $100,000 and do not forget you if you are doing some managing partner type tasks since that part of your time goes here in overhead). Take that very same number and we will call that your last 3rd, which we will call gross revenues (another $100,000). What you need to do is take the overall amount (in this example $300,000) and now determine how much you should charge per see here billable hour, per repaired rate or how lots of contingency cost cases won to be sure you struck the target we need to strike provided our first 3rd number times three (in this example $300,000).
This technique shows you how much per hour you require to charge. If you are the owner of the practice you are worthy of a fair earnings as well don't you concur? If this technique is a bit too complicated do feel complimentary to contact me and I will assist you arrange it out in a few minutes on the phone.
It is a excellent concept to believe through all of these pricing methods in identifying your law practice management pricing strategy prior to setting a cost and moving ahead with a law firm marketing strategy to guarantee you are completely checking out all options. In another post I will tell you how to speak to possible customers so you never ever have a problem getting the fee you are worthy of.