More Revenue

Your law firm can accelerate Practice Group and/or Firm revenue with the right Pricing Strategy.

Five Ways to Find More Revenue

Maybe the Great Recession wasn’t all that bad for the legal industry. Thanks to the “death to the billable hour” movement, law firms have been adopting alternative fee arrangements (AFAs) and learning AFAs generate more revenue. Managed correctly, AFAs are more profitable, too.

Good New: Legal industry watchers continue to report an increase in RFPs.
Bad News: Law firms continue to win less than 33% of their submissions.

The right Pricing Strategy helps firms win more RFPs, which translates into more revenue.

Attorneys have been trained in the practice of law, not the business of law. When confronted with buyer demands, attorneys are quick to discount: 10%, 15%, 20%. The “fives” may sound good and be easy to calculate; often, they go too far. Firms can find more revenue by forbidding the fives.

Most of the time, Practice Groups and Firms focus on increasing rates. On rare occasions, firm leaders reverse that focus, going to market with lower rates (e.g., launching a new Practice Group, creating a segment of services). Economically, lower rates create higher demand, yielding more revenue.

Buyers want to buy at the lowest price. Sellers want to sell at the highest price. This “tug-of-war” hinges on the buyer’s willingness-to-pay (WTP). Practice Group and Firm leaders will realize more revenue by training their attorneys to identify WTP.

Willingness-To-Pay: The Subscription Test

A group of 100 students at MIT’s Sloan School of Management were asked to conduct an experiment: Purchase a one-year subscription to The Economist.

Web Subscription: $59
Web+Print Subscription: $125

By a 2-to-1 margin, 68% of students selected the Web Subscription.
Next, the students were given a third choice:

Web Subscription: $59
Print Subscription: $125
Web+Print Subscription: $125

By a 5-1 margin, 84% of students opted for the more expensive Web+Print Subscription.

 

The result? More Revenue (43%) by understanding WTP.

Ready for More?

If your Pricing Strategy is not helping you increase your
Firm or Practice Group Profitability, it’s time to take action!