Law Practice Management-- How To Identify Your Costs
Identifying charges is a hard law practice management job for many attorneys when believing through their law company marketing strategies. In determining fees for certain services, lawyers often fall short of what they should charge. Too many attorneys are scared of even charging the competitive price for their services when making their law firm marketing plans.
Prior to you sit down and start believing through your law practice management prices strategy you need some differences around pricing commonly utilized in law company marketing preparation. Do know a law practice management law firm marketing plan is not effective if you only bring in people who want to pay the lowest fee for a service. Instead, you desire to focus your law practice management and law firm marketing strategies on drawing in clients who will become long term assets to the firm.
There are essentially 4 methods of figuring out just how much you should be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Prices
This is one excellent method of figuring out prices. Get your assistant to support you in this law practice management job and spend some time discovering what the variety of rates remains in the neighborhood. Have her do a "mystery consumer" study by calling around as if he/she were a potential customer and discover out what your competitors say on the phone to her around pricing. She may require to call from her home phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their fees or you might do that with other attorneys yourself in your market. If you really wish to enter it and have maximum data you can compose maybe a couple of dozen rivals in your market and say you are doing a cost survey and if they would send you their fee list you will develop a composite list that does not recognize those responding and send them a copy of the outcomes. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most typical services offered in your practice location. Now you will see what people are charging for services comparable to those you offer. You need to be able to come up with a series of rates. Use this variety 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 ought to be at or in the leading 25% of the fees.
Bear in mind that in general it is not a great law practice management method to compete 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 provider, or the firm. And people who are searching for a low rate will follow that low price wherever they can find it instead of ending up being long-lasting clients. So make certain that your rate covers your costs and a sensible revenue margin.
The Expense Approach in Law Practice Management Prices
This law practice management pricing technique is really straightforward truly. The most common error in law practice management using this approach is to neglect to consist of some form of your expenditure.
In law practice management often you count yourself out of the expenditures and you should include yourself in the costs. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you should consider one salary as due you for your time and competence as the professional and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the technique used by lots of auto mechanics (it is called "the flat rate book") and other service suppliers. This technique is where you determine a fixed rate for various tasks and charge that rate no matter what. Another example using this approach is how managed health care has used this system with hospitals and medical professionals . this hyperlink
The " Guideline of Three" in Law Practice Management Rates
This " guideline of thumb" called the " guideline of three" utilized in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. For the very first third we will take the overall amount of salaries/bonuses (not advantages just wages-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first 3rd. What you need to do is take the overall quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per repaired rate or how many contingency cost cases won to be sure you hit the target we should strike given our first 3rd number times 3 (in this example $300,000).
This approach shows you how much per hour you need to charge. Since you know how lots of billable hours each revenue generator can do monthly, merely divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out correctly. As long as you hit your targets you will be assured of a 15% to 30% net profit from your operations. After all if you are the owner of the practice you deserve a reasonable earnings too do not you concur? This method is called the Guideline of 3. , if this technique is a bit too confusing do feel free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent idea to think through all of these prices methods in identifying your law practice management prices method before setting a rate and moving ahead with a law office marketing strategy to guarantee you are thoroughly checking out all options. Remember the propensity for the majority of lawyers is to price too low. Do not do that! In another article I will inform you how to speak to prospective customers so you never have a issue getting the charge you are worthy of.