Law Practice Management-- How To Identify Your Costs
Identifying costs is a tough law practice management task for the majority of attorneys when believing through their law firm marketing strategies. In identifying costs for specific services, attorneys often fall short of what they need to charge. Too numerous lawyers are afraid of even charging the competitive rate for their services when making their law firm marketing plans.
Before you sit down and begin thinking through your law practice management rates method you need some distinctions around prices typically used in law firm marketing preparation. Do know a law practice management law company marketing strategy is not efficient if you just draw in people who desire to pay the lowest cost for a service. Rather, you want to focus your law practice management and law company marketing plans on attracting customers who will become long term properties to the firm.
There are basically 4 ways of determining just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Pricing
This is one excellent way of identifying pricing. Get your assistant to support you in this law practice management job and spend a long time discovering what the variety of prices remains in the community. Have her do a " secret consumer" study by calling around as if he/she were a prospective customer and find out what your rivals say on the phone to her around pricing. She might need to call from her house phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and use to exchange your fees for their costs or you could do that with other legal representatives yourself in your market. If you actually desire to enter into it and have optimal data you can write possibly a few lots competitors in your marketplace and say 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 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 provided in your practice location. Now you will see what people are charging for services comparable to those you provide. You should have the ability to come up with a variety of costs. Use this range to set rates for your own services. My recommendation in law office marketing preparation is to charge at the 75% level of the list. So you should be at or in the top 25% of the charges.
Keep in mind that in basic it is not a excellent law practice management strategy to contend on cost. A lot of potential customers will see rates 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 trying to find a low price will follow that low cost any place they can find it instead of ending up being long-lasting customers. So make sure that your cost covers your expenses and a affordable profit margin.
The Cost Method in Law Practice Management Prices
This law practice management pricing technique is very uncomplicated actually. The most typical error in law practice management utilizing this approach is to overlook to include some type Read Full Report of your cost.
In law practice management typically you count yourself out of the expenditures and you ought to include yourself in the expenditures. Typically you are doing at least some of the management work. If you are all three of these in one, you ought to think about one wage as due you for your time and knowledge as the professional and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the technique utilized by lots of auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you determine a fixed rate for different tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has actually used this system with medical facilities and doctors .
The " Guideline of 3" in Law Practice Management Pricing
This " guideline of thumb" called the " guideline of 3" used in law practice management is not what your CPA might tell you and it does not fail you either. For the first 3rd we will take the overall quantity of salaries/bonuses (not benefits just salaries-- benefits go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are producing profits) and call that our first third. What you require to do is take the overall amount (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 charge cases won to be sure you struck the target we must hit offered our very first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you need to charge. If you are the owner of the practice you should have a fair earnings as well don't you agree? If this approach is a bit too confusing do feel totally free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a great concept to believe through all of these pricing approaches in identifying your law practice management pricing technique prior to setting a price and continuing with a law practice marketing plan to ensure you are thoroughly checking out all options. Remember the tendency for the majority of lawyers is to price too low. Do not do that! In another post I will inform you how to speak to prospective clients so you never ever have a issue getting the cost you should have.