Law Practice Management-- How To Identify Your Costs
Figuring out costs is a hard law practice management task for most attorneys when believing through their law company marketing plans. In determining costs for specific services, attorneys typically disappoint what they must charge. A lot of lawyers hesitate of even charging the competitive price for their services when making their law company marketing plans. Further, they make the rates decisions often without any data or conceptual structure. Additionally, rather of focusing their efforts on how they can justify getting leading dollar for what they use, they charge a cost that is often way too low and often really can frighten prospective clients who think there is something missing from a service that is " inexpensive". In addition numerous attorneys don't understand that many buyers in the marketplace by far are " worth purchasers" and not looking for " low-cost".
Before you sit down and start believing through your law practice management rates method you require some distinctions around rates commonly utilized in law company marketing planning. Do know a law practice management law firm marketing strategy is not reliable if you just draw in individuals who want to pay the lowest fee for a service. Instead, you desire to focus your law practice management and law company marketing plans on bring in clients who will end up being long term properties to the firm.
There are basically 4 methods of determining how much you should be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Prices
This is one good method of determining prices. Get your assistant to support you in this law practice management job and spend some time discovering what the series of prices is in the community. Have her do a "mystery consumer" study by calling around as if he/she were a prospective customer and learn what your rivals state on the phone to her around prices. She might need to call from her house phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and provide to exchange your fees for their costs or you could do that with other legal representatives yourself in your market. If you really wish to enter it and have maximum information you can write possibly a couple of dozen competitors in your market and state you are doing a fee survey and if they would send you their charge list you will develop a composite list that does not determine those responding and send them a copy of the outcomes. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services used in your practice location. Now you will see what people are charging for services similar to those you provide. You should be able to come up with a range of prices. Use this variety to set prices for your own services. My recommendation in law company 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 fees.
Remember that in general it is not a excellent law practice management technique to compete on price. A lot of prospective clients will see prices that is too low as a signal that there is something missing either from the service, the provider, or the firm.
The Cost Approach in Law Practice Management Prices
This law practice management rates method is very simple actually. The most typical mistake in law practice management check that using this approach is to disregard to include some kind of your cost.
In law practice management typically you count yourself out of the expenses and you ought to include yourself in the expenditures. Typically you are doing at least some of the management work. If you are all 3 of these in one, you need to consider one salary as due you for your time and competence as the professional and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the approach used by lots of car mechanics (it is called "the flat rate book") and other service providers. This approach is where you determine a set rate for various tasks and charge that rate no matter what. Another example using this approach is how managed health care has actually used this system with physicians and hospitals .
The "Rule of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" utilized in law practice management is not what your CPA may inform you and it does not fail you either. For the very 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 earnings) and call that our first 3rd. What you require to do is take the total quantity (in this example $300,000) and now figure out how much you must charge per billable hour, per repaired rate or how lots of contingency fee cases won to be sure you struck the target we should strike provided our first third 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 fair earnings as well do not you agree? If web this approach is a bit too confusing do feel free to contact me and I will assist you sort it out in a couple of minutes on check the phone.
It is a good idea to analyze all of these rates techniques in identifying your law practice management rates strategy prior to setting a cost and moving ahead with a law practice marketing strategy to guarantee you are completely checking out all choices. Remember the tendency for the majority of attorneys is to price too low. Don't do that! In another short article I will tell you how to talk to potential customers so you never have a issue getting the fee you are worthy of.