Solo Practice

Marketing Begins with Your ?Product? - PART FOUR: Pricing Analysis

By Garrett Worley

We’ve discussed identifying problems, providing solutions and packaging legal services in the first three parts of this series. In Part Four, I’ll discuss pricing analysis and how this affects inbound marketing.

When it comes to pricing, there are two techniques that are imprecise, but widespread. The first pricing technique is to determine what competitors are charging and set your own prices accordingly. This seems like a good enough approach because it keeps your prices in line with those of the competition and ensures that you don’t charge too much or too little.

The second technique is a slight variation on the first. After determining what your competitors charge, set your prices lower. That’s the Sam Walton approach and seems logical because clients will want to pay as little as possible for legal services, right?

The problem with both of these techniques is that the entire focus of the pricing strategy is on your competitors, and not the unique legal services that only you provide. What you charge for your services should be based on the actual value that you provide to clients. Some clients may be willing to pay substantially more for your services if those services offer them more value than competitors. Setting your prices based on competitors’ fees eliminates the significant profit margin you would enjoy if only you employed a value-based pricing model.

That’s not to say that you shouldn’t consider your competitors’ prices. In fact, determining what others charge for similar services is a good place to start. Once you know what competitors charge, your focus should shift to what differentiates you from your competitors. Experience, knowledge and services offered are some of the factors that you should take into account when determining how you stack up against the competition.  Often, these factors will justify charging more for your services.

But wouldn’t a lower fee attract more clients?

Clients are savvier than you think.  When people need legal help, they often ask their friends for references first.  Usually, these people ask their friends if they know of a good attorney.  Who asks their friends to refer them to a cheap attorney?   This simple fact is illuminating because it demonstrates that most clients are in search of one thing: value.

If you offer superior service and expertise, clients will be happy to pay more.  In fact, higher prices are often used as a marketing strategy because high prices are associated with high quality in clients’ minds.  Just be sure that if you decide to employ this strategy you’re offering the highest quality services available.

Full post as published by Garrett Worley's Blawg on February 01, 2008 (boomark / email).