Law Practice Management-- How To Identify Your Costs
Figuring out fees is a tough law practice management task for many attorneys when thinking through their law company marketing plans. In determining costs for specific services, lawyers typically fall short of what they must charge. Too lots of attorneys are afraid of even charging the competitive rate for their services when making their law firm marketing plans.
Prior to you sit down and begin believing through your law practice management rates strategy you require some differences around pricing typically used in law firm marketing planning. Do know a law practice management law firm marketing plan is not efficient if you just draw in individuals who desire to pay the lowest cost for a service. Rather, you desire to focus your law practice management and law firm marketing plans on drawing in customers who will end up being long term assets to the company.
There are basically four methods of determining how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Pricing
This is one excellent way of identifying prices. Get your assistant to support you in this law practice management job and spend some time finding what the series of rates is in the community. Have her do a " secret buyer" study by calling around as if he/she were a potential client and discover out what your competitors say on the phone to her around prices. She might require to call from her house phone to prevent caller ID. As another option you might have him/her call other assistants or paralegals at your rivals and offer to exchange your costs for their costs or you could do that with other lawyers yourself in your market. If you truly desire to get into it and have maximum information you can compose possibly a couple of dozen competitors in your market and say you are doing a cost study and if they would send you their cost list you will create a composite list that does not determine those reacting and send them a copy of the outcomes. To keep it basic for them consist of a stamped, self-addressed envelope with a list of the most typical services provided in your practice location. Now you will see what individuals are charging for services comparable to those you use. You should be able to develop a variety of rates. Utilize this variety to set prices for your own services. My recommendation in law firm marketing planning is to charge at the 75% level of the list. So you must be his response at or in the leading 25% of the charges.
Remember that in basic it is not a good law practice management method to contend on price. Many potential clients will see prices that is too low as a signal that there is something missing out on either from the service, the service provider, or the company.
The Cost Approach in Law Practice Management Prices
This law practice management prices technique is very simple actually. One simply identifies what the costs are to provide services or products and adds on a affordable profit, someplace in between fifteen percent at the least and perhaps thirty 3 percent at the most. The most typical error in law practice management using this method is to neglect to consist of some kind of your expenditure. Solo and little firm lawyers tend to not include their own salary!
In law practice management frequently you count yourself out of the costs and you need to include yourself in the costs. Often you are doing at least some of the management work. If you are all 3 of these in one, you ought to think about one salary as due you for your time and expertise as the professional and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the approach used by numerous auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you figure out a fixed rate for different tasks and charge that rate no matter what. If the mechanic invests less time than allocated for the job, he makes more. He makes less if he spends more time than allocated. In the end, it all evens out (well, typically to the mechanics' favor if you ask me). Another example using this approach is how managed health care has actually used this system with medical facilities and doctors . Lawyers can use this system if they desire.
The "Rule of 3" in Law Practice Management Pricing
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 try this out does not browse around here fail you either. For the first third we will take the overall amount of salaries/bonuses (not advantages simply wages-- advantages go into the second 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are creating earnings) and call that our very first third. What you require 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 fixed rate or how many contingency cost cases won to be sure you struck the target we should hit provided our very first third number times three (in this example $300,000).
This technique shows you how much per hour you need to charge. If you are the owner of the practice you should have a reasonable earnings as well do not you agree? If this technique is a bit too complicated do feel totally free to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to think through all of these pricing approaches in determining your law practice management pricing technique prior to setting a price and continuing with a law office marketing strategy to ensure you are completely exploring all alternatives. Remember the propensity for most attorneys is to price too low. Don't do that! In another post I will inform you how to speak with prospective customers so you never ever have a issue getting the cost you deserve.