Law Practice Management-- How To Identify Your Costs
Determining charges is a difficult law practice management job for the majority of lawyers when thinking through their law company marketing plans. In determining charges for particular services, attorneys frequently fall brief of what they must charge. Too numerous lawyers are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
Prior to you sit down and begin thinking through your law practice management pricing technique you need some distinctions around prices commonly used in law company marketing preparation. Include your pricing strategy to your law firm marketing strategies. You require to be sure that you are charging a sufficient cost on whatever to ensure you a good earnings not simply a good living. If you only draw in people who want to pay the lowest charge for a service, do know a law practice management law company marketing plan is not reliable. These are not devoted clients. Rather, you desire to focus your law practice management and law office marketing plans on attracting clients who will become long term properties to the company. Low cost customers are not developing your base of long term customers I can assure you that.
There are basically four methods of identifying just 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 great way of identifying prices. Get your assistant to support you in this law practice management task and invest some time finding what the series of pricing remains in the community. Have her do a "mystery shopper" research study by calling around as if he/she were a possible customer and discover out what your competitors say on the phone to her around rates. She might need to call from her house phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and use to exchange your charges for their charges or you might do that with other attorneys yourself in your market. If you actually want to get into it and have optimal information you can write possibly a couple of dozen rivals in your marketplace and state you are doing a fee 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 results. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services used in your practice area. Now you will see what individuals are charging for services comparable to those you offer. You must be able to develop a series of rates. Use this range to set prices for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. So you need to be at or in the leading 25% of the costs.
Remember that in general it is not a great law practice management method to contend on cost. Most prospective customers will see pricing that is too low as a signal that there is something missing either from the service, the supplier, or the firm. And people who are searching for a low rate will follow that low rate wherever they can find it rather than ending his comment is here up being long-lasting customers. Be sure that your rate covers your expenses and a affordable profit margin.
The Cost Method in Law Practice Management Pricing
This law practice management pricing approach is very straightforward actually. The most common mistake in law practice management utilizing this technique is to overlook to consist of some type of your expense.
In law practice management frequently you count yourself out of the costs and you must include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you should consider one income as due you for your time and proficiency as the professional and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the method used by many car mechanics (it is called "the flat rate book") and other service suppliers. This method is where you identify a fixed rate for numerous jobs and charge that rate no matter what. Another example using this technique is how managed health care has actually utilized this system with hospitals and medical professionals .
The "Rule of 3" in Law Practice Management Pricing
This " general rule" called the " guideline of 3" utilized in law practice management is not what your CPA may tell you and it does not fail you either. Ask your Certified Public Accountant what they think about it and they will like it. To begin we are going to be believing in thirds. For the very first 3rd we will take the total amount of salaries/bonuses (not benefits simply incomes-- benefits enter into the 2nd third following) for the income generators and/or timekeepers (this includes you if you are creating income) and call that our first third. Add up the wages of the attorneys, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your first 3rd (lets just state that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your 2nd third which we will call your "overhead" (thus that 2nd third is $100,000 and don't forget you if you are doing some handling partner type duties 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 earnings (another $100,000). What you need to do is take the overall quantity (in this example $300,000) and now figure out just you can find out more how much you need to charge per billable hour, per fixed rate or the number of contingency fee cases won to be sure you struck the target we should strike provided our first 3rd 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 should have a reasonable revenue as well do not you concur? If this technique is a bit too complicated do feel free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these pricing techniques in determining your law practice management prices method prior to setting a rate and moving ahead with a law office marketing strategy to ensure you are thoroughly exploring all choices. Keep in mind the propensity for the majority of attorneys is to price too low. Do not do that! In another post I will inform you how to talk to possible clients so you never have a issue getting the cost you should best site have.