Law Practice Management-- How To Determine Your Costs
Figuring out fees is a difficult law practice management task for a lot of attorneys when believing through their law company marketing strategies. In figuring out costs for certain services, attorneys often fall short of what they should charge. Too many attorneys are afraid of even charging the competitive cost for their services when making their law firm marketing plans.
Before you sit down and begin believing through your law practice management pricing method you require some differences around pricing commonly utilized in law firm marketing planning. Do understand a law practice management law firm marketing plan is not efficient if you only draw in people who want to pay the least expensive charge for a service. Rather, you want to focus your law practice management and law firm marketing plans on attracting customers who will end up being long term possessions to the firm.
There are generally four ways of figuring out just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Prices
Get your assistant to support you in this law practice management task and invest some time finding what the range of prices is in the community. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. My recommendation in law firm marketing planning is to charge at the 75% level of the list.
Remember that in general it is not a great law practice management strategy to compete on price. Most prospective clients will see prices that is too low as a signal that there is something missing either from the service, the supplier, or the company.
The Expense Technique in Law Practice Management Pricing
This law practice management prices technique is really simple actually. The most common error in law practice management utilizing this technique is to overlook to include some kind of your cost.
In law practice management often you count yourself out of the costs and you must include yourself in the costs. Frequently you are doing at least some of the management work. If you are all three of these in one, you must consider one income as due you for your time and competence as the service technician and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Prices
This is the approach utilized by lots of automobile mechanics (it is called "the flat rate book") and other company. This method is where you determine a set rate for numerous tasks and charge that rate no matter what. If the mechanic invests less time than set aside for the task, he makes more. He makes less if he spends more time than designated. But in the end, it all levels (well, normally to the mechanics' favor if you ask me). Another example utilizing this approach is how managed healthcare has utilized this system with doctors and medical facilities . Attorneys can use this system if they want.
The " Guideline of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the first 3rd we will take the total quantity of salaries/bonuses (not benefits simply salaries-- advantages go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are generating profits) and call that our first 3rd. What you need to do is take the overall amount (in this example $300,000) and now figure out how much you should charge per billable hour, per fixed rate or how numerous contingency fee cases won to be sure you hit the target we need to hit More about the author offered our first third number times 3 (in this example $300,000).
This method reveals you how much per hour you need to charge. Since you understand the number of billable hours each earnings generator can do monthly, merely divide that into your overall of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be guaranteed of a 15% to 30% net benefit from your operations. If you are the owner of the practice you are worthy of a reasonable profit as well do not you concur? This technique is understood as the Guideline of 3. , if this method is a bit too confusing do feel free to call me and I will assist you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these prices approaches in determining your law practice management rates method prior to setting a price and moving ahead with a law firm marketing strategy to ensure you are completely exploring all options. In another post I will tell you how to speak to possible customers so you never ever have a issue getting the charge you deserve.