Identifying charges is a hard law practice management job for most attorneys when thinking through their law company marketing plans. In identifying costs for particular services, attorneys typically fall brief of what they ought to charge. Too lots of lawyers are afraid of even charging the competitive price for their services when making their law firm marketing plans.
Before you sit down and begin believing through your law practice management prices technique you need some distinctions around pricing frequently utilized in law firm marketing planning. Then add your pricing strategy to your law firm marketing strategies. You need to be sure that you are charging a enough cost on everything to ensure you a excellent revenue not just a excellent living. Do understand a law practice management law practice marketing strategy is not reliable if you just draw in people who wish to pay the most affordable fee for a service. These are not devoted customers. Instead, you want to focus your law practice management and law practice marketing strategies on attracting customers who will become long term properties to the company. Low cost customers are not constructing your base of long term customers I can promise you that.
There are essentially four methods of identifying how much you should be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Pricing
Get your assistant to support you in this law practice management task and invest some time finding what the range of pricing is in the neighborhood. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services used in your practice area. My suggestion in law firm marketing planning is to charge at the 75% level of the list.
Bear in mind that in general it is not a good law practice management method to contend on cost. A lot of possible customers will see pricing that is too low as a signal that there is something missing out on either from the service, the service provider, or the company. And people who are searching for a low price will follow that low price any place they can discover it instead of becoming long-term customers. So make certain that your price covers your expenses and a sensible revenue margin.
The Expense Approach in Law Practice Management Prices
This law practice management rates technique is really uncomplicated actually. The most common mistake in law practice management using this method is to neglect to include some type of your cost.
In law practice management typically you count yourself out of the costs and you should include yourself in the expenses. Typically you are doing at least some of the management work. If you are all three of these in one, you should think about one salary as due you for your time and know-how as the service technician and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate this page Method in Law Practice Management Rates
This is the approach utilized by numerous car mechanics (it is called "the flat rate book") and other service providers. This technique is where you determine a fixed rate for numerous tasks and charge that rate no matter what. He makes more if the mechanic spends less time than allotted for the task. If he spends more time than allocated, he earns less. In the end, it all evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this technique is how managed healthcare has actually used this system with hospitals and physicians . If they want, attorneys can use this system.
The "Rule of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of three" used in law practice management is not what your CPA might tell you and it does not fail you either. Ask your CPA what they consider it and they will like it. To begin we are going to be thinking in thirds. For the first third we will take the total quantity of salaries/bonuses (not advantages simply wages-- advantages enter into the 2nd 3rd following) for the profits generators and/or timekeepers (this includes you if you are generating income) and call that our first third. Add up the salaries of the lawyers, paralegals, and legal secretaries who create earnings or are timekeepers and call this your very first third (lets just state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your second 3rd which we will call your "overhead" ( therefore that second 3rd is $100,000 and do not forget you if you are doing some managing partner type duties because that part of your time goes here in overhead). Then 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 need to charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you struck the target we should hit offered our first 3rd number times 3 (in this example $300,000).
This approach shows you how much per hour you need to charge. If you are the owner of the practice you deserve a reasonable profit as well don't you concur? If this approach is a bit too confusing do feel free to contact me and I will assist you sort it out in a few minutes on the phone.
It is a good concept to believe through all of these prices techniques in determining your law practice management prices method before setting a cost and moving ahead with a law firm marketing plan to ensure you are thoroughly exploring all alternatives. Remember the propensity for the majority of lawyers is to price too low. Don't do that! In another post I will inform you how to speak with prospective customers so you never have a issue getting the charge you are worthy of.