Legal Marketing & PR

Never Compete on Price

By Michael

If you’ve followed this blog any length of time, or if you subscribe to my e-zine, The Profitable Practice (you can do so in the side bar), then you know I advocate that lawyers follow a fixed fee, value pricing model.  I believe that model to be superior to an hourly billing model.  If you haven’t already done so, I invite you to read my white paper on the subject, titled Pricing for Maximum Profit.  It is available under the resources section of this blog.  In it I discuss ways to command premium fees and how I use the fixed fee value pricing model in my own divorce practice.

In this article, however, I want to emphasize the importance of setting fees in your law practice on the high side of your market.    I believe that your goal should be to charge premium fees for premium service.

As a new lawyer, I had difficulty quoting higher fees.  I was afraid that my prospective clients would not pay me unless I was right in line with what others with similar experience were charging.  As it turns out, the problem was not with my clients, it was with me.  The problem was a self image problem.

I have since learned that you will never get paid more than you think you are worth.  That may sound like psycho-babble.  Perhaps it is.  But, it is still the truth.

If you are doing the things in your practice that you should be doing (e.g. choosing a niche, being the expert in that niche, providing exceptional client service, etc.) then you?ve earned the right to charge more for your services.  But, unless you believe that, your prospective clients never will.

And, here is one more reason for you to believe it: you never want to compete on price.  There is no doubt that you can build a business entirely by offering the lowest price.  But, why would you want to?  Would you rather have 4 clients paying you $25,000 each, 100 clients paying you $1,000 each, or 1000 clients paying you $100 each?

Of course, the question is rhetorical.  But the answer is instructive.

Additionally, when you compete only on price, all someone has to do to take a client is to offer a lower price.  When you compete on EXCELLENCE, VALUE, GUARANTEED SERVICE, etc. it is much more difficult, if not impossible for a competitor to steal your clients.

Of course, there is another point about price.  Your prospect believes ?you get what you pay for.?  If that is the case, do you want to hold yourself out as the ?low price lawyer??  Put another way, do you want to be the Mercedes of law firms or the Hyundai of law firms?  The Nordstrom?s or the Dollar Store?

Full post as published by Law for Profit on February 19, 2008 (boomark / email).