Put Yourself In Your Client's Shoes - Is It A Good Financial Fit?
Just the other day I ran a Quicken year-to-date comparison on five non-negotiable household expenses. While I expected to be unhappy at the increase in my day-to-day expenses, I didn't expect to be slack-jawed
Home Heating Oil $ 1,000 $ 4,790
Gas $ 2,600 $ 5,200
Food $ 6,240 $ 10,400
Electric $ 600 $ 1,080
RE Taxes $ 4,200 $ 6,600
TOTAL $14,640 $ 28,010
That's nearly a 100% increase in five mandatory expenses in just seven years. This analysis showed me how nearly $14,000 in discretionary income got swallowed up by non-negotiable expenses. And my husband's salary only increased 2.5 - 3% per annum.
The reason I bring this up is to show you while you may be squeezed as a solo practitioner, raising your prices is not necessarily going to be the answer to covering your bills. Your clients, if you deal with individuals, are going to be looking at their non-negotiable expenses, too, and deeply distressed. Their discretionary income is evaporating as well.
This begs the question: How will you be coping with your potential clients loss of discretionary income and their increasing inability to pay you for your services?
Are you thinking about reducing your overhead expenses, going home to go to work? Will you be able to provide necessary legal services at affordable rates which will enable clients to still hire you rather than trying to go pro se or using forms? Simply telling potential clients their legal matter is too complicated to do without a lawyer or you provide great 'value' will not dissuade someone from doing it themselves if they are frantic over their financial obligations. You need to provide a pricing structure, including payment terms, which allows you to earn a living while successfully encouraging a potential client to hire you rather than trying to handle their legal needs themselves.
It is all well and good to simply say, "I'll charge premium prices for premium services" and then target the affluent. That pool is very small and shrinking further. Plus, everyone and their brother is competing for this business which turns the affluent into negotiating buyers. Realize if everyone is experiencing this dramatic shift in their budgets, it is the lawyer who is tuned in to this angst, addresses it with a pricing model which still permits them to take home 60-70% of each dollar earned, who will have plenty of work to do and turning a nice profit.
- Analyze your overhead; and
- Your (in)effective use of technology; and
- delegation of less profitable tasks;
- See if there is any opportunity to decrease your overhead while increasing your productivity; and
- Look at your pricing structure to see if you can improve upon fees, payment terms and payment options.
Put yourself in your client's shoes. What have you done to help them make the decision to hire you easier in these trying economic times?