Law Practice Management-- How To Identify Your Charges
Determining costs is a hard law practice management job for the majority of attorneys when thinking through their law firm marketing plans. In determining fees for specific services, attorneys frequently fall brief of what they must charge. Too many attorneys hesitate of even charging the competitive cost for their services when making their law office marketing strategies. Further, they make the rates choices frequently with no data or conceptual structure. Furthermore, instead of focusing their efforts on how they can validate getting top dollar for what they provide, they charge a charge that is often way too low and often really can terrify off prospective customers who believe there is something missing out on from a service that is "cheap". Furthermore lots of lawyers do not recognize that most purchasers in the market by far are "value purchasers" and not trying to find " inexpensive".
Before you sit down and begin thinking through your law practice management rates method you need some distinctions around prices frequently utilized in law company marketing planning. Do understand a law practice management law company marketing strategy is not effective if you just attract people who want to pay the most affordable charge for a service. Rather, you desire to focus your law practice management and law company marketing strategies on drawing in customers who will end up being long term possessions to the company.
There are generally 4 methods of identifying how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Prices
This is one great way of identifying prices. Get your assistant to support you in this law practice management task and spend some time finding what the series of prices is in the neighborhood. Have her do a " secret consumer" study by calling around as if he/she were a prospective client and discover what your competitors state on the phone to her around prices. She may need to call from her house phone to avoid caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their costs or you might do that with other attorneys yourself in your market. If you really wish to enter into it and have maximum information you can write maybe a couple of dozen rivals in your marketplace and state you are doing a cost survey and if they would send you their cost list you will produce a composite list that does not identify those reacting and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services offered in your practice location. Now you will see what people are charging for services similar to those you use. You must have the ability to create a series of costs. Use this range to set prices for your own services. My recommendation in law firm marketing preparation is to charge at the 75% level of the list. You must be at or in the leading 25% of the charges.
Keep in mind that in general it is not a excellent law practice management technique to compete on cost. The majority 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 supplier, or the company.
The Cost Method in Law Practice Management Rates
This law practice management pricing approach is really simple really. The most common mistake in law practice management utilizing this approach is to overlook to include some kind of your cost.
OK, let me say it once again. In law practice management frequently you count yourself out of the expenses and you should include yourself in the expenditures. Why? Frequently you are doing a minimum of a few of the technical work. Yes? Often you are doing a minimum of some of the management work. Yes? As the owner of business you are due a sensible profit. Yes? If you are all 3 of these in one, you must consider one income as due you for your time and know-how as the service technician and manager along with a profit of fifteen to thirty percent due you as the owner. So make sure to include a sensible expense for your managerial and technical operate in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the approach utilized by many auto mechanics (it is called "the flat rate book") and other service suppliers. This technique is where you figure out a set rate for different tasks and charge that rate no matter what. Another example using this method is how handled health care has actually utilized this system with healthcare facilities and doctors .
The " Guideline of Three" in Law Practice Management Rates
This " guideline of thumb" called the "rule of 3" utilized in law practice management is not what your CPA may tell you and it does not fail you either. For the very first third we will take the total quantity of salaries/bonuses (not benefits simply wages-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are creating earnings) and call that our first 3rd. What you need to do is take the overall amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how many contingency fee cases won to be sure you struck the target we need to hit given our very first third number times three (in this example $300,000).
This method shows you how much per hour you need to charge. If you are the owner of the practice you are worthy of a reasonable earnings as well don't you agree? If this method is a bit too confusing do feel totally free to contact me and I will help you arrange it out in a few minutes on the phone.
It is a more helpful hints excellent idea to analyze all of these rates techniques in identifying your law practice management prices method before setting a cost and continuing with a law office marketing strategy to guarantee you are thoroughly exploring all alternatives. Remember the tendency for most attorneys is to price too low. Do not do that! In another article I will tell you how to talk to prospective customers so you never have a issue getting the fee you deserve.