Law Practice Management-- How To Identify Your Costs
Figuring out costs is a challenging law practice management job for many lawyers when thinking through their law company marketing plans. In figuring out charges for certain services, attorneys often fall brief of what they ought to charge. Too many attorneys are scared of even charging the competitive rate for their services when making their law company marketing strategies.
Before you sit down and start thinking through your law practice management prices technique you require some differences around rates typically utilized in law company marketing preparation. Do understand a law practice management law company marketing strategy is not reliable if you only bring in people who desire to pay the lowest charge for a service. Rather, you desire to focus your law practice management and law company marketing strategies on bring in customers who will become long term properties to the company.
There are basically 4 methods of figuring out just how much you must be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Prices
This is one excellent way of figuring out prices. Get your assistant to support you in this law practice management task and spend 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 prospective customer and discover what your rivals state on the phone to her around rates. She may need to call from her house phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your competitors and use to exchange your fees for their costs or you might do that with other attorneys yourself in your market. If you truly wish to enter it and have optimal information you can write perhaps a couple of lots rivals in your marketplace and say you are doing a cost survey and if they would send you their cost list you will produce a composite list that does not recognize those responding and send them a copy of the results. To keep it simple 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 people are charging for services comparable to those you use. You must be able to come up with a variety of costs. Utilize this range to set prices for your own services. My recommendation in law office marketing preparation is to charge at the 75% level of the list. You should be at or in the top 25% of the fees.
Remember that in basic it is not a excellent law practice management technique to complete on price. Many possible customers will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company.
The Cost Method in Law Practice Management Rates
This law practice management rates approach is extremely simple really. The most typical error in law practice management using this technique is to disregard to include some form of your expense.
In law practice management typically you count yourself out of the expenditures and you must 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 need to consider one income as due you for your time and knowledge as the professional and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the approach used by numerous vehicle mechanics (it is called "the flat rate book") and other service providers. This method is where you figure out a fixed rate for various jobs and charge that rate no matter what. Another example using this technique is how managed health care has actually utilized this system with health centers and physicians .
The "Rule click this of Three" in Law Practice Management Pricing
This "rule of thumb" called the " guideline of three" utilized in law practice management is not what your CPA may tell you and it does not fail you either. For the first 3rd we will take the total amount 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 producing revenue) and call that our first 3rd. What you need 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 fixed rate or how numerous contingency cost cases won to be sure you hit the target we should hit offered our very first 3rd number times three (in this example $300,000).
This approach shows you how much per hour you need to charge. If you are the owner of the practice you should have a reasonable profit as well do not you concur? If this method is a bit too complicated do feel totally free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a great concept to analyze all of these rates techniques in determining your law practice management prices strategy prior to setting a price and moving ahead with a law practice marketing plan to guarantee you are thoroughly checking out all alternatives. Remember the propensity for many legal representatives is to price too low. Don't do that! In another post I will inform you how to speak to prospective customers so you never have a problem getting the charge you should have.