Law Practice Management-- How To Determine Your Costs
Identifying fees is a difficult law practice management job for a lot of attorneys when believing through their law practice marketing strategies. In identifying charges for certain services, lawyers often disappoint what they should charge. A lot of attorneys hesitate of even charging the competitive cost for their services when making their law office marketing plans. Further, they make the rates choices often without any data or conceptual framework. In addition, instead of focusing their efforts on how they can validate getting leading dollar for what they use, they charge a fee that is frequently way too low and often really can scare off possible clients who think there is something missing from a service that is " inexpensive". In addition lots of lawyers don't recognize that a lot of buyers in the market without a doubt are " worth buyers" and not looking for "cheap".
Before you sit down and start thinking through your law practice management rates method you need some distinctions around pricing commonly used in law company marketing planning. Then add your rates method to your law firm marketing plans. You need to be sure that you are charging a sufficient cost on whatever to ensure you a good earnings not simply a good living. Do understand a law practice management law practice marketing plan is not reliable if you just bring in people who want to pay the least expensive cost for a service. These are not loyal customers. Rather, you desire to focus your law practice management and law office marketing intend on attracting clients who will end up being long term assets to the company. Low cost clients are not constructing your base of long term clients I can assure you that.
There are generally 4 methods of identifying just how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Pricing
Get your assistant to support you in this law practice management task and spend some time discovering what the range of pricing is in the neighborhood. 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 area. My recommendation in law company marketing planning is to charge at the 75% level of the list.
Remember that in basic it is not a good law practice management method to contend on cost. The majority of possible clients will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the firm.
The Cost Method in Law Practice Management Pricing
This law practice management rates technique is very simple really. The most common error in law practice management utilizing this technique is to disregard to include some kind of your expenditure.
In law practice management typically you count yourself out of the expenditures and you ought to include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you need to consider one salary as due you for your time and competence as the service technician and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the method utilized by lots of car mechanics (it is called he said "the flat rate book") and other service providers. This approach is where you identify a fixed rate for various jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has actually utilized this system with medical facilities and medical professionals .
The " Guideline 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 and it does not fail you either. For the very first 3rd we will take the total amount of salaries/bonuses (not benefits simply wages-- advantages go into the second third coming next) for the revenue generators and/or timekeepers (this includes you if you are generating earnings) and call that our very first 3rd. What you need to do is take the total 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 offered our first third number times 3 (in this example $300,000).
This approach shows you how much per hour you require to charge. Given that you understand how many billable hours each revenue generator can do each month, just 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 correctly. As long as you strike your targets you will be guaranteed of a 15% to 30% net profit from your operations. After all if you are the owner of the practice you are worthy of a reasonable revenue also do not you agree? This approach is known as the Guideline of Three. , if this technique is a bit too complicated do feel free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these rates methods in determining your law practice management rates method before setting a cost and continuing with a law office marketing plan to ensure you are thoroughly exploring all alternatives. Keep in mind the propensity for most attorneys is to price too low. Do not do that! In another post I will inform you how to speak with potential clients so you never have a problem getting the fee you deserve.