Law Practice Management-- How To Identify Your Costs
Identifying costs is a challenging law practice management job for most attorneys when thinking through their law company marketing strategies. In determining fees for particular services, attorneys often fall brief of what they must charge. Too many attorneys are scared of even charging the competitive rate for their services when making their law firm marketing plans.
So prior to you sit down and start believing through your law practice management prices strategy you need some differences around prices commonly utilized in law practice marketing planning. Add your prices method to your law company marketing strategies. You require to be sure that you are charging a enough fee on everything to guarantee you a good profit not just a good living. If you just draw in people who want to pay the lowest fee for a service, do understand a law practice management law company marketing plan is not effective. These are not loyal customers. Rather, you wish to focus your law practice management and law office marketing intend on drawing in clients who will become long term properties to the company. Low price customers are not constructing your base of long term clients I can promise you that.
There are essentially four methods of identifying how much you should be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Rates
Get your assistant to support you in this law practice management task and spend some time discovering what the range of prices is in the community. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice location. My recommendation in law company marketing preparation is to charge at the 75% level of the list.
Remember that in general it is not a good law practice management technique to compete on rate. A lot of possible clients 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 Expense Approach in Law Practice Management Prices
This law practice management prices approach is very uncomplicated really. The most typical error in law practice management using this technique is to disregard to include some type of your expenditure.
In law practice management typically you count yourself out of the expenditures and you should include yourself in the expenses. Often you are doing at least some of the management work. If you are all three of these in one, you should consider one salary as due you for your time and expertise as the specialist and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the method used by lots of car mechanics (it is called "the flat rate book") and other service suppliers. This technique is where you determine a set rate for different tasks and charge that rate no matter what. Another example utilizing this approach is how Homepage managed health care has utilized this system with healthcare facilities and doctors .
The " Guideline of 3" in Law Practice Management Prices
This " guideline of thumb" called official website the " guideline of three" used in law practice management is not what your CPA may inform you and it does not fail you either. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits simply wages-- advantages go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating profits) and call that our first third. What you need to do is take the total quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you hit the target we must hit given our first 3rd number times 3 (in this example $300,000).
This method reveals you how much per hour you need to charge. Given that you understand the number of billable hours each income generator can do per month, merely divide that into your overall of all thirds ($300,000) to see what you anonymous need to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be assured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you deserve a reasonable profit as well don't you concur? This method is called the Rule of 3. If this technique is a bit too complicated do do not hesitate to contact me and I will help you arrange it out in a few minutes on the phone.
It is a great concept to analyze all of these prices methods in identifying your law practice management pricing method before setting a rate and continuing with a law office marketing strategy to ensure you are completely checking out all options. Keep in mind the tendency for many lawyers is to price too low. Don't do that! In another post I will tell you how to speak to prospective customers so you never ever have a problem getting the charge you are worthy of.