Law Practice Management-- How To Identify Your Costs
Figuring out fees is a tough law practice management job for many lawyers when believing through their law firm marketing plans. In identifying fees for specific services, lawyers frequently fall short of what they need to charge. Too many attorneys are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
Prior to you sit down and start thinking through your law practice management prices technique you need some differences around prices typically used in law company marketing planning. Then include your prices strategy to your law company marketing strategies. You require to be sure that you are charging a sufficient charge on whatever to ensure you a excellent revenue not just a great living. Do understand a law practice management law practice marketing strategy is not reliable if you only attract people who wish to pay the most affordable charge for a service. These are not loyal customers. Rather, you wish to focus your law practice management and law practice marketing strategies on attracting clients who will end up being long term properties to the company. Low cost clients are not constructing your base of long term customers I can promise you that.
There are generally 4 methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
This is one excellent way of figuring out rates. Get your assistant to support you in this law practice management job and invest a long time finding what the series of rates is in the community. Have her do a "mystery shopper" study by calling around as if he/she were a possible client and discover what your competitors 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 might have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their fees or you could do that with other attorneys yourself in your market. If you truly want to enter it and have maximum information you can write perhaps a couple of lots competitors in your market and state you are doing a fee study and if they would send you their cost list you will produce a composite list that does not identify those reacting and send them a copy of the outcomes. To keep it simple for them include 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 provide. You ought to be able to create a series of costs. Use this range to set prices for your own services. My recommendation in law practice marketing preparation is to charge at the 75% level of the list. So you must be at or in the leading 25% of the fees.
Remember that in general it is not a excellent law practice management method to compete on price. The majority of potential customers will see prices that is too low as a signal that there is something missing either from the service, the company, or the company.
The Cost Technique in Law Practice Management Rates
This law practice management pricing method is really straightforward actually. The most common mistake in law practice management utilizing this technique is to overlook to include some kind of your expense.
In law practice management often you count yourself out of the costs and you ought 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 must think about one salary as due you for your time and know-how as the specialist and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the method utilized by numerous automobile mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify 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 utilized this system with medical professionals and healthcare facilities .
The " Guideline of 3" in Law Practice Management Rates
This "rule of thumb" called the " guideline of 3" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. For the first third we will take the overall amount of salaries/bonuses (not benefits simply salaries-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you important site are creating profits) and call that our first 3rd. What you require to do is take the total amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how many contingency cost cases won to be sure you hit the target we must hit offered our first 3rd number times 3 (in this example $300,000).
This technique reveals you just how much per hour you require to charge. Since you know how lots of billable hours each revenue generator can do each month, merely divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you hit your targets you will be guaranteed of a 15% to 30% net make money from your operations. After all if you are the owner of the practice you should have a fair revenue as well don't you agree? This method is called the Guideline of 3. If this approach is a bit too confusing do do not hesitate to call me and I will assist you arrange it out in a few minutes on the phone.
It is a good idea to believe through all of these prices techniques in identifying your law practice management prices technique before setting a cost and moving ahead with a law firm marketing strategy to guarantee you are completely exploring all choices. In another article I will tell you how to speak to potential clients so you never have a issue getting the fee you should have.