Steps In Determining Your Law Firm Pricing
Law Firm Pricing
3 min read
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Now that you understand the different legal pricing models available, it is time to think through which models you will use for your firm. Start by revisiting your pricing philosophy—this should frame how you are thinking about your pricing models.
Setting your price requires that you understand the value of your work. Value means different things to different clients. Since value depends on context, it means your client’s price should depend on context. Ask yourself how your clients benefit from their relationship with you, and do your best to understand the value of those benefits.
For example, do your clients value the ability to have unfettered access to you and your team? If so, your clients may be willing to pay more for that access. Do your clients just want good, quality service without extra bells and whistles? These clients might not want to pay top dollar.
Think about your ideal client and consider if there is a legal pricing model that they would prefer. If you’re unsure, this is a great time to pick up the phone and ask them. Walk them through questions to help you understand what matters most to them.
You might be surprised to find things your client will pay more for or parts of your service that they would easily forgo if they could spend less.
It’s always a good idea to understand what is happening in your market and where your prices fall relative to other options. This means you’ll need to do some research to know what other law firms and non-law firm solutions your ideal client may consider. You can talk to other attorneys in your area, do research online, or even ask your potential clients what other firms quoted them.
It sounds like a given, but your business needs to receive more income than it spends on expenses. These should be considerations when you price your services.
It’s usually easier to work backward on this. Say you want to earn $100,000 a year. First, determine the total cost of your firm’s operating expenses by adding together expenses like monthly rent, phone, utilities, your software subscriptions, marketing expenses, virtual receptionist and bookkeeper, office supplies, etc for the year. If these annual operating expenses total $25,000, or about $2,100 a month, you’ll need to generate at least $125,000 a year, or around $10,500 a month.
Using the information you’ve already gathered in the process, you should have a sense of how much you’d like to charge for each type of service you offer. If you were thinking of charging $2,500 for basic estate planning services, is it realistic that you could generate at least 4 new clients each month?
It may be that you experiment with different price offerings until you find the mix that works for you.