How to Solve the Competing-on-Price Problem in Your Practice
Are you being continually forced to compete for clients based on price? If so, then you need to be aware of what is at the root of this problem: chasing the wrong prospects is the basis of all pricing problems.
Casting a wide net for clients without applying any targeting criteria is dangerous because sometimes it works. The clients you get by doing this are inevitably those that will pound you on price and beat up on your staff as well.
If you choose to compete only on price, your fees have exactly one way to go – down.
So how can you target the right client that will allow you to charge what you’re worth? Here are three quick steps:
Create an ideal client profile — Think in terms of age, profession, gender, education, interests, marital status, family size, hobbies, and lifestyle. If you’ve had clients you consider ideal, what did they share in common that made them an ideal client for you?
Communicate your target – educate everyone in your firm as well as your referral sources about what an ideal client is for your practice.
Have a qualifying process – before you sign on a new client, put them through a qualifying process that educates them about how you work, what they can expect, how you charge and what is expected of them. If they balk, they’re not a good fit.
When attorneys come to me complaining of being shopped on price I tell them these three things:
Only 15 percent of people buy solely based on price, which means 85 percent of people take price into consideration but it’s not their only — or even their most important — consideration. The best thing you can do for your practice is identify those true “price shoppers” early on in the consult and quickly refer them to your competitors because they are nothing but trouble.
It’s almost never about the money! When people focus on the price, it’s rarely about the money—it is almost always about your failure to show them enough value. You need to emphasize how the price is reasonable compared to the value you are bringing to the situation.
Be ready to challenge people when they bring up price as a major objection. When a prospect brings up price, especially early on in the conversation, directly ask them, “Is price the major factor in making your decision?” Most will quickly answer, “No, but it is something I’m going to consider.” You can then respond, “Certainly, but what are the other factors you are going to use in determining who to hire as your attorney?” Once they list the other factors, you can use them to show how you can meet or exceed those criteria. If the prospect says that price is the main consideration, refer him or her to someone else.
Once you start attracting your ideal client, you’ll be able to charge what you are worth and stop worrying about competing on price.