“More for less” is the mantra from clients, challenging law firms not just to cut their costs but to deliver more and better services. This productivity challenge, on top of everything else, could leave managing partners wondering where to start.
Set your prices at the right point
This week we talk about pricing and I am going to give you a number of ideas about how to arrive at the best price and avoid leaving money on the table.
Nine times out of ten a dissatisfied client will cite “price” as being the reason for their dissatisfaction but this rarely turns out to be the case. Lack of communication is the number one reason for dissatisfied clients and frequently lack of communication on costs. So the first tip is to keep the client informed about progress and about costs – clients don’t like surprises any more than we do.
So, how do you go about setting a price for a piece of work? Easy, you estimate the hours to do the work the client needs and then apply the charge rate (the one you set at the start of the year) and bingo you have a price. OK but no one ever pays full charge rate so you knock a bit off. Sound familiar?
There are a number of drawbacks to this approach:
Make the changes necessary to deliver what clients want efficiently and profitably
Of course, half the battle is understanding what your clients really really want and Sally covered that last week in Part 2 of the programme. I'm going to take that idea further this week - it's critical to understand that from the client's perspective there are some mission critical parts of your service that absolutely have to be delivered in the same way on time every time. If you mess up on the mission critical parts, there's a real problem. If you like, there's a sort of Maslow's Hierarchy of Needs that can be applied to what your client wants from you - we've made it easy for you and added a free download to our site for you so you can see what we mean. You can also use this download to map out the mission critical parts of what your clients want from you.
But this programme is called the Profitable Growth Programme: we advocate growing business that is profitable. So you will see that we have marked on the download a reminder to map your own critical business requirements.
Understand what your ideal clients value
This week is all about how to understand what your ideal clients value about your firm: what they really, really want from you. There are two main reasons for wanting to know this: first, to make sure that you continue to deliver exactly what your core clients love about working with you and second, to be able to articulate to potential new ideal clients what it is about your firm that they are going to love!
Surely all clients want the same thing?
Not at all.
As 2013 got underway, headlines announced the death of the high street. HMV, Jessops, and Blockbusters followed Woolworths and Comet to an unglamorous end. Threats from out of town shopping centres, online shopping and the predominance of the supermarket big brands have all added to an extremely challenging trading environment. Retail vacancy rates stand at 10% and the government commissioned Mary Portas, Queen of Shops to produce a report on how to revitalise our city centres.
Why should lawyers care? Don’t you have enough of your own problems to worry about?
Sign up here for our latest insights. We promise only ever to send you relevant, useful and practical information designed to help you to achieve your business objectives or promote new ideas.
We invest in developing ideas so we can share them.