7 Ways To Decide “What Do I Charge This Client?”

You want to know what industry I think teaches me the most about my law firm?

Feel free to take a guess.

Ready for it?

The restaurant industry, and here's why:

As much as we might want to be fancy pants white collar ivory tower...that's not REALLY where we sit.

No one is going in to do their own brain surgery, but plenty of people do their own divorce.

Heck, I'll bet a higher % of people are more afraid of doing their own taxes than representing themselves in a low level criminal case (plus they might get the PD for free or a reduced rate).

So the restaurant industry competes not just with other restaurants, but ALSO with people making food at home.

And is concerned not just with the major chain places coming to town, but also with some company disrupting the industry with technology (UberEats is the LegalZoom in this analogy)

So everytime I go out to eat I think about my companies and what pricing/service/etc I can discern makes sense for us to add.  And to be fair, usually it's nothing.

But, last week my family went to an Outback Steakhouse during our road trip - go ahead and judge me all you want - normally I don't like to eat at chain restaurants on vacation, but after 7 months on the road and in Redding, California...please allow me a fuckin' bloomin' onion...

I have this thing in my life about food where it has to beat a certain benchmark, some examples:

A burger has to be noticeably better than Wendy's baconator (tough in Orlando to get one not overcooked)

A sandwich has to beat a Publix sub (doable, but not often unless you go for a fancy italian or something way different of a sandwich)

For steak, it's Outback.  Your super fancy grass fed, 40 day aged steak better be medium rare AND needs to make an outback steak taste like chicken that fell on the floor (usually an easy bar to clear)

And we had a GREAT meal.  The server was incredible and even during the lunch rush and being the only person there.  And the food hit the spot I expected: that cheap, fried but not fast food spot.

But then I got the bill and with tip it was $100 for a blooming onion, a kids meal, 1 coke, an entree salad, and my steak.  Is that worth it?

So I went back to my go to line...whenever anybody asks how much something should cost I always use this

“less than you want to charge, but more than the client wants to pay.”

While that's true (and funny I hope), it's not terribly helpful, so let's talk about 5 ways to price things out:

HOW TO PRICE YOUR SERVICES

1) Just bill by the hour

I fucking hate this one - it means you have raises prices or work more to make more money...I will not belabor this point, you have my thoughts in longer form a bunch of different places.

2) Valuing your time at a specific rate multiplied by how much time you expect something to take

Example: as near as I can tell, $200 is about an average hour for a lawyer, so let's say you're an above average $250.  A case takes you about 10 hours...you charge $2500...boom

3) Price out what it costs in hard costs, add on the percentage profit that you should be doing, and go that way

So if you're using a contractor who charges $400 for a bankruptcy filing, and it cost you $200 to get an open a file, and you want to be 40% profitable...it's $1000.

4) Look at the value you provide, and then charge appropriately

If you keep your client out of jail for the next 20 years of their life and they make an average of $50,000 a year, you saved them $1,000,000...so is that worth a $25,000 fee for the case?  And can you collect what they sign for?

For lawyers this could also be contingency, you get a percentage of the VALUE you get the client.

5) Ask somebody else with relatively similar experience and knowledge and training and similar clients, and see what they charge

Just make sure you ask the RIGHT person.  The dude down the street who works 80 hours a week and cannot ever retire is probably NOT the right ask for this...also, then you're sort of a collective monopoly (someone smarter than me can add the right word to this...but it can be illegal price fixing)

6) Ask your clients afterwards what you should’ve paid what did you want to pay for it and then adjust accordingly

You betcha that some clients will tell you they would have paid more.  Most will tell you the price is fine...really you want to know what else they want from you to add the RIGHT value.  Either in upselling them later on (keeping on eye on their trademark being infringed upon, updating their will after they have another kid, doing their early termination of probation).  Eventually it might be worth it for you to wrap that into your costs and raise your price.

7) Just fucking throw out a number and hope and pray they agree to it (maybe not the BEST idea...but certainly an option that I have done every now and then)

You can always change the price later, you can always edit the offering later, you can always add more value later.

There’s a lot of ways to go about it but none of it really matters unless you actually do it. Unless you have that offering, and try and charge for it, and try and sell it, and get those clients, trying to get stuck up on the price is just one more limiting belief that you’re allowing yourself to have.

In my past, as a former criminal defense attorney, I sort of always felt 250 an hour was fair.  But I charged people flat fees so I would pretty much do option #2. My problem was I would also try to maximize my time, so then things would take me less time. But instead of raising my rates because of that, I would keep them the same or lower them. And that’s probably why I was never terribly successful as a criminal defense lawyer.

As a PI lawyer now, it's super easy.  We charge the statutory maximum. And maximize the value to clients both in the amount that they get but also in service they get from our firm. And then it’s really easy to keep adding value to them whether that’s better check-ins, or helping them find the best doctors, whether that’s staying in touch with them afterwards or inviting them to a party...etc.

For legalese that’s where it gets more complicated.

Currently, we have three common entry level offers $2000, $3000, and $5000. 

The $2000 gets you an audit of your CRM/system from an intake standpoint. Or the plan to build one.

The $3000 does the same thing but for all of your tech systems or more than just your intake.

And the $5000 is the $3000 plus a full marketing plan where we center your brand around your ideal client and figure out what channels and strategies and campaigns make the most sense.

And we credit half of those $$$ amounts towards the work from the plans, but this is like a doctor figuring out what's wrong before they prescribe you something you don't need (which is what most other marketers do and I STILL don't understand why...)

Now from the end of those offerings, we will set up a customized plan for everybody. For example:

Maybe you need more video content but don't want something scripted constantly. Then a live-streamed show would be perfect once a week for $3,500 a month. 

Suppose you need more social content such as articles, videos, or carousel graphics. Having us produce weekly batched content would be closer to $4,000 monthly. 

When you're ready to expand your reach, we have a scalable management fee for advertising to help you get more of the right eyeballs. 

And those price points are based upon our hard cost plus everybody’s salary plus building in profit margin...we make a bit if they don't hire for more work, but really we use these tripwire buys to get people setup for the RIGHT plans for them.

The running joke slogan being you pay us a shit ton, we make you a fuck ton.

BUT THEN WHAT CAN I DO WITH MY FIRM?

What I’m seeing more and more of now is people being hesitant to change their pricing models or even to raise their rates. However...guess what? over the last several months everything just got more expensive.

Earlier this week I spoke with a lawyer in Houston who just broke $4 a gallon on gas.  When I was there in November it was $2.30 a gallon...that a HUGE swing in 7 months.

And at the end of the day, there’s only so much you can control. And so that’s what you have to focus on.

What can you be doing now is figuring out how to maximize your value going forward.  Maybe that’s building your personal brand, maybe that’s expanding your firm, maybe that’s opening a second company, maybe it's just raising your hourly rate $25 an hour... I don't know the answer - that parts on you - but I know that's the right focus.

And obviously the more you put who you want to serve, who you want to help, who you wanna work with ahead of your own selfish needs, the easier all of this becomes and the more successful you will be.  I know there are SOME people truly motivated by money, but for most of us...it's just a tool.

For me, I love working with growth minded law firm owners who are bringing in $500,000 or more a year in gross revenue. I truly believe that we firm owners thread the needle between making enough money to build lifestyles and legacies for a family, while also still being engaged with “normal people“ in a way that we can drive maximum value to all of our clients as well as those we care about. 

And that’s why it’s exciting to me: what I get to do and who I get to work with.

Like you all!  Or y'all.

So what questions do you have about pricing?

Before I let you all go, I wanted to wish everyone a happy early Juneteenth! We pride ourselves at LegalEase Marketing on not being that company that only cares about a holiday 1 day a year, but if you're interested in more of the history of our newest federal holiday - check out this external article.

Until Next Friday

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