Something that comes up an awful lot in discussions with lawyers, accountants, and business advisers is the thorny subject of pricing. How should lawyers and accountants charge for their services?
I have heard more different points of view than I can remember. Some think you need to discount to stay competitive. Others argue that with rising costs, fees need to be increased.
Both scenarios (and everything in between) present conundrums, careful consideration, potentially difficult conversations and – if you get it wrong – commercial consequences.
But before attempting to share my point of view, I want to make the case for value and the need to reframe how you think, act, and communicate pricing changes.
What is the difference between cost and value?
Value is the sum of price + quality + service.
The old maxim that you pay for what you get really is true … pay cheap, pay twice! You can’t have quality and service at discounted fees and perennially discounted fees won’t lead to a sustainable firm.
While many fee earners talk about their concern about how clients will react to price increases, in my experience the real issue is the fee earners’ confidence in the strength of their client relationships.
If the only interaction a lawyer or accountant has with a client is transactional – a transaction that will undoubtedly be linked to worry or worse – it definitely isn’t the time to discuss pricing.
However, if you are talking/meeting more frequently and away from open files or cases, you can turn the conversation to the question of pricing in conjunction with a much wider discussion about making sure you are adding value where/how/when the client wants and are matching up to their physical billing requirements in terms of the timing, frequency and format of your bills.
How can lawyers and accountants increase the charges for their services without losing clients?
Here are 7 tips that will help your firm increase its prices without upsetting your clients, or at least allow you to defend your new few levels if you are forced to put them up.
1. Start thinking differently about pricing. Don’t focus on cost; focus on the value of your services and the outcomes your clients achieve.
2. Review your prices and terms annually and apply them across the board. Don’t slip into the habit of maintaining the same fees year after year for recurring services to long established clients.
3. Act strategically. Servicing unprofitable clients is preventing your business from attracting more profitable new clients.
4. See the bigger picture. Your clients are facing cost pressures too so they will be increasing their prices. They’ll understand if you to do the same.
5. Make it personal! Communicate changes to pricing and terms up front. Don’t let your clients find out when they receive an invoice from you.
6. Targeting niches. Niches are less focused on cost and more focused on quality, reliability and specialist advice.
7. Give clients options. Matching their preferred timing, frequency and format for invoices will lessen the pain and show you’re serious about your relationship.
If you would like to discuss any aspect of your firm’s marketing (which includes your pricing, product, promotion and placement!) or business development, please get in touch today and we can find a convenient time to talk.