Monday, February 22, 2010

Afraid your fees are too high? For whom?

When I hear this, my first question is always “too high for whom?”  My general rule is that unless you are priced far above every other lawyer, then business lost on price is business you shouldn’t be taking anyway. If you didn’t have financial pressures, you wouldn’t miss those clients, so don’t spend your time or energy worrying about losing them. Work with clients who value you as much as you value yourself. Being slightly out of price reach is a way to build your positioning over time.
Here are some things to consider when you set your fees:

1.    Include wiggle room in your margin – when your practice is built on tight margins, you have no room to handle changes or things you couldn’t anticipate. Constant conversations about changing fee estimates drive clients crazy. When you’re stressed out because you’re not making enough money on a matter, you will dread your client’s call. You won’t be eager to “go the extra mile” that creates loyal clients.

2.    Don’t think of yourself as selling hours. Remember what you’re offering for that fee.  Be paid for your experience, for the results you deliver, for the sum of your knowledge. Your pricing is part of your brand. Pricing too low is as great a threat to your success as pricing too high. If you’re feeling this fear, chances are, your prices are not too high. Use marketing strategies to position yourself as an expert to support your fee levels.

3.       Never “dextify” your pricing. Dextify is my favorite non-word, it means “defend, explain or justify”.  Never, ever dextify. Instead, say “in my experience, that’s the size of investment you need to make to ensure the result that you want to see.”  Or try, “if it’s out of your budget, then maybe I can refer you to someone you might be able to afford."
Remember that for some, $500/hour is perfectly reasonable, while others will balk at paying a percentage of that number.

And, the last thing to consider about your fees is that your work funds your life. How much time you spend working, and the return on that time determines how much income and free time you have.  If your fees don’t support the life you want, you’re wasting your time life.