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LawBiz® TIPS – Week of October 27, 2015

LawBiz(r) newsletter

Last year, I saw the play "If/Then” starring the fabulous singer, Idina Menzel. The premise is that if you take one path, you have one result, and if you take another path, you'll find a different result. It's your volition that causes you to take one path or the other. There are many factors that cause you to choose one over another. The outcome is determined by commitment, effort and luck.

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Value Pricing: A Win-Win Situation

Everyone is looking for a break in expenses, so if you can offer clients reduced prices for services, you will be able to attract more clients. The question, though, is how you can offer clients a reduced price without cheating yourself out of hard-earned money for your services. The answer is value billing.

Almost any case or project can be broken into tasks, and each task can be priced separately and differently to create multiple pricing schemes within a single transaction based on client preferences and value perceptions.

A matrix can be developed to show a list of tasks necessary for a particular case and the pricing options available for each task. For example, you might offer to bill a letter of intent at an hourly rate or at a fixed cost. You might offer to bill a post-closing agenda at an hourly rate, a blended hourly rate, or a fixed cost. And you might offer to bill negotiations at an hourly rate or at an agreed percent option.

Such a matrix can demonstrate to clients those areas where costs can be controlled and those areas where costs are inherent and educate clients about what can be done to lower the overall cost of a project.

Such value-added elements will let you generate billing statements that are easy to understand and that clearly list actions taken on the client's behalf while relating those actions to the time it took to realize that value. These billing statements will go beyond a mere laundry list of tasks performed and thus be more meaningful to the client than mere hourly billing.

In the end, value billing is a win-win situation for both sides: the client will be happy with a smaller bill, and the lawyer will be happy with a fee reflecting services performed.



Value Pricing: A Win-Win Situation

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