Identifying charges is a difficult law practice management job for a lot of attorneys when thinking through their law firm marketing plans. In figuring out costs for particular services, attorneys often fall brief of what they ought to charge. Too many lawyers are afraid of even charging the competitive price for their services when making their law company marketing plans.
Before you sit down and start thinking through your law practice management rates technique you require some distinctions around pricing typically used in law firm marketing preparation. Then add your rates method to your law office marketing plans. You need to be sure that you are charging a adequate cost on everything to guarantee you a good earnings not simply a excellent living. Do know a law practice management law office marketing plan is ineffective if you just draw in people who wish to pay the most affordable fee for a service. These are not loyal customers. Instead, you desire to focus your law practice management and law practice marketing strategies on attracting clients who will end up being long term properties to the firm. Low rate clients are not constructing your base of long term clients I can assure you that.
There are generally four methods of identifying how much you must be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Pricing
This is one great way of determining pricing. Get your assistant to support you in this law practice management task and invest a long time discovering what the range of prices remains in the community. Have her do a "mystery shopper" study by calling around as if he/she were a prospective customer and discover out what your competitors say on the phone to her around rates. She may need to call from her home phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your competitors and provide to exchange your fees for their charges or you might do that with other legal representatives yourself in your market. If you truly wish to get into it and have maximum information you can write possibly a few lots rivals in your marketplace and state you are doing a fee study and if they would send you their charge list you will produce a composite list that does not recognize those reacting 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 typical services used in your practice area. Now you will see what people are charging for services comparable to those you offer. You ought to be able to develop a series of costs. Use this range to set rates for your own services. My suggestion in law practice marketing planning is to charge at the 75% level of the list. You ought to be at or in the leading 25% of the costs.
Bear in mind that in general it is not a great law practice management strategy to compete on price. Many potential clients will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the firm. And individuals who are trying to find a low price will follow that low rate any place they can discover it rather than ending up being long-term customers. Be sure that your cost covers your costs and a sensible earnings margin.
The Expense Technique in Law Practice Management Rates
This law practice management prices technique is very simple actually. One merely determines what the costs are to provide additional reading products or services and adds on a affordable revenue, somewhere between fifteen percent at the least and maybe thirty three percent at the most. The most typical mistake in law practice management using this technique is to overlook to consist of some kind of your expense. Solo and small firm attorneys tend to not include their own wage!
In law practice management frequently you count yourself out of the costs and you must include yourself in the costs. Frequently you are doing at least some of the management work. If you are all three of these in one, you should think about one wage as due you for your time and competence as the service technician and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the approach used by many auto mechanics (it is called "the flat rate book") and other service providers. This method is where you determine a set rate for different jobs and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the job. If he invests more time than designated, he makes less. However in the end, all of it evens out (well, generally to the mechanics' favor if you ask me). Another example utilizing this approach is how managed healthcare has used this system with health centers and doctors . If they want, lawyers can use this system.
The " Guideline of 3" in Law Practice Management Rates
This " guideline of thumb" called the "rule of three" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the first third we will take the total amount of salaries/bonuses (not advantages simply incomes-- advantages go into the 2nd 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are generating profits) and call that our first 3rd. What you require to do is take the overall amount (in this example $300,000) and now figure out how much you must charge per billable hour, per fixed rate or how many contingency charge cases won to be sure you hit the target we should hit provided our very first third number times 3 (in this example $300,000).
This approach reveals you how much per hour you require to charge. If you are the owner of the practice you deserve a fair revenue as well do not you concur? If this technique is a bit too confusing do feel complimentary to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a great idea to believe through all of these prices approaches in identifying your law practice management pricing method before setting a price and moving ahead with a law firm marketing strategy to ensure you are thoroughly checking out all choices. In another post I will inform you how to speak to potential clients so you never have a problem getting the cost you should have.