Tips for a Better Pricing Strategy
Compared to all the years you put into developing your expertise, deciding what to charge for your services should be a snap. If, instead, you find pricing to be a headache, you’re not alone. It doesn’t just vex law practices, but companies of all sizes and descriptions. According to one global marketing study, companies worldwide lose up to 25% of potential profit by failing to charge their customers and clients properly. Here are some points to consider.
Don’t undercut yourself. As an independent professional, you may be tempted to take any work, or offer bargain rates to attract new clients — especially if you’re just getting established. While it may take longer, it’s often easier to build a base of clients who are willing to pay fair rates for what you do than it is to raise prices on those who have grown accustomed to your lower rates.
Compete on value, not price. What do you like most about your favorite restaurant? Chances are, price factors way behind other considerations, such as the carefully prepared food, friendly staff and pleasing atmosphere. If price is your central attraction, your clients may see your law services as a commodity interchangeable with any other provider. Clients will happily pay for the value — provided you reward their investment with personal attention and superior service.
Get a true sense of your costs. Even as you think about what to charge by the hour, day or project, don’t neglect a detailed assessment of the other side of the equation: your costs. It’s easy to underestimate your costs, especially in a service business where you’re not ordering tons of raw materials. Factor in not just the cost of your own time, but also the cost of support staff, office supplies and equipment, utilities, and local, state and federal taxes. An accurate idea of what you pay to keep the lights on and the office open can help you pin down how much you must charge to earn a decent profit.
Review your clientele. If you’re working crazy hours but it still feels like you’re just making ends meet, it may be time for a close, unsentimental look at your client roster. It may be that some provide steady, high-margin work, while others fill your schedule with small, unprofitable assignments and scrimp on their spending. Even if you’ve had those clients forever, trimming your list and focusing on the high-end clients could make your workload more manageable, even as it takes your pricing to a more profitable level.
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