Law Practice Management-- How To Determine Your Costs
Determining costs is a difficult law practice management job for most lawyers when analyzing their law company marketing strategies. In identifying fees for certain services, lawyers often disappoint what they need to charge. A lot of attorneys hesitate of even charging the competitive cost for their services when making their law firm marketing plans. Even more, they make the prices choices frequently without any data or conceptual framework. In addition, instead of focusing their efforts on how they can validate getting leading dollar for what they provide, they charge a cost that is often way too low and typically actually can scare off prospective customers who think there is something missing from a service that is " inexpensive". In addition many attorneys do not understand that most purchasers in the marketplace without a doubt are " worth buyers" and not looking for "cheap".
Prior to you sit down and begin believing through your law practice management pricing technique you require some distinctions around prices frequently used in law company marketing preparation. Do understand a law practice management law firm marketing strategy is not effective if you only bring in individuals who want to pay the most affordable fee for a service. Rather, you desire to focus your law practice management and law firm marketing strategies on attracting customers who will become long term possessions to the company.
There are generally four methods of identifying just how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one great way of figuring out pricing. Get your assistant to support you in this law practice management task and invest some time finding what the range of pricing remains in the community. Have her do a " secret buyer" research study by calling around as if he/she were a possible client and discover out what your competitors state on the phone to her around pricing. She may need to call from her home phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their charges or you could do that with other legal representatives yourself in your market. If you actually wish to enter into it and have maximum information you can write maybe a few lots competitors in your marketplace and state you are doing a charge study and if they would send you their charge list you will produce a composite list that does not identify those reacting and send them a copy of the results. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what individuals are charging for services comparable to those you offer. You should have the ability to come up with a series of prices. Utilize this Recommended Site variety to set costs 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 top 25% of the charges.
Remember that in general it is not a good law practice management strategy to compete on rate. Most potential customers will see prices 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 Approach in Law Practice Management Prices
This law practice management prices technique is really uncomplicated really. The most common mistake in law practice management using this method is to overlook to consist of some form of your expense.
In law practice management often you count yourself out of the expenses and you should include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all three of these in one, you need to think about one wage as due you for your time and expertise as the technician and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Rates
This is the technique used by numerous vehicle mechanics (it is called "the flat rate book") and other service companies. This approach is where you figure out a fixed rate for various jobs and charge that rate no matter what. Another example using this approach is how managed health care has used this system with medical facilities and physicians .
The "Rule of Three" in Law Practice Management Pricing
This " guideline of thumb" called the "rule of 3" 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 3rd we will take the total quantity of salaries/bonuses (not benefits just salaries-- advantages go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are producing profits) and call that our very first third. 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 numerous contingency fee cases won to be sure you struck the target we must hit offered our first 3rd number times three (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 agree? If this method is a bit too confusing do feel free to contact me and I will assist you arrange it out in a couple of minutes on the phone.
It is a good idea to believe through all of these pricing approaches in determining your law practice management pricing technique prior to setting a rate and moving ahead with a law firm marketing plan to ensure you are completely checking out all alternatives. In another post I will inform you how to speak to potential customers so you never ever have a issue getting the fee you deserve.