Law Practice Management-- How To Determine Your Costs
Identifying fees is a tough law practice management job for most attorneys when thinking through their law company marketing strategies. In figuring out charges for particular services, attorneys typically fall short of what they ought to charge. Too lots of lawyers are scared of even charging the competitive rate for their services when making their law firm marketing plans.
Prior to you sit down and start believing through your law practice management pricing technique you require some differences around prices frequently used in law firm marketing preparation. Do understand a law practice management law company marketing plan is not reliable if you just attract individuals who want to pay the lowest charge for a service. Rather, you want to focus your law practice management and law company marketing strategies on drawing in clients who will end up being long term properties to the company.
There are essentially four 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 great way of identifying rates. Get your assistant to support you in this law practice management job and invest some time discovering what the series of rates is in the neighborhood. Have her do a "mystery buyer" research study by calling around as if he/she were a potential customer and learn what your competitors say on the phone to her around prices. She may require to call from her house phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and offer to exchange your fees for their fees or you could do that with other lawyers yourself in your market. If you truly wish to enter it and have maximum data you can write possibly a few dozen rivals in your marketplace and state you are doing a cost survey and if they would send you their fee list you will develop a composite list that does not determine those responding and send them a copy of the results. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most typical services used in your practice location. Now you will see what people are charging for services similar to those you provide. You ought to be able to create a variety of costs. Use this range to set costs for your own services. My suggestion in law company marketing planning is to charge at the 75% level of the list. 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 method to complete on rate. Most potential customers will see rates 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 Method in Law Practice Management Pricing
This law practice management rates approach is extremely simple truly. The most common mistake in law practice management using this technique is to disregard to include some kind of your cost.
In law practice management often you count yourself out of the expenses and you ought to include yourself in the costs. Typically you are doing at least some of the management work. If you are all three of these in one, you should consider one income as due you for your time and know-how as the technician and manager 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 used by lots of automobile mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a fixed rate for different jobs and charge that rate no matter what. Another example using this method is how handled health care has utilized this system with health centers and physicians .
The "Rule of Three" in Law Practice Management Rates
This " guideline of thumb" called the " guideline of three" used in law practice management is not what your CPA might inform you my latest blog post and it does not fail you either. For the very first third we will take the total quantity of salaries/bonuses (not advantages simply incomes-- benefits go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating revenue) and call that our very first third. What you require 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 lots of contingency charge cases won to be sure you hit the target we must strike provided our first 3rd number times three (in this example $300,000).
This approach reveals you how much per hour you need to charge. If you are the owner of the practice you are worthy of a fair earnings as well don't you agree? If this technique is a bit too complicated do feel free to contact me and I will help you sort it out in a few minutes on the phone.
It is a excellent concept to think through all of these rates methods in determining sites your law practice management rates strategy prior to setting a rate and moving ahead with a law company marketing plan to guarantee you are completely checking out all alternatives. In another article I will tell you how to speak to possible customers so you never have a problem getting the charge you should have.