I read a great article at The Rainmaker Blog about ways to achieve marketing success. One particularly interesting point he made at the end of the article was to emphasize price at your own peril.
This is not the time to reduce your rates just to pull a few more clients in the door. It’s often the price shoppers who are the most demanding, take up more of your time, complain more frequently, and are slow payers.
He hits the nail on the head here. It is so tempting to adjust your pricing to get that next client in door. Cash flow is tough, your account receivables aren’t coming in, whatever the case may be. You are simply trading one set of problems for a different set.
Here are three reasons you shouldn’t sell your legal services on price:
1. Anyone can undercut you: Selling any professional service on price is difficult and risky positioning. The biggest reason is that at any time, someone else can decide to undercut your price. If that happens, you lose. You are no longer the cheapest guy in town. Also, you face the problem that people often associate quality with price. I remember when I was living outside the Detroit area there was an eye clinic that offered lasik surgery. Their big marketing push was that they were the cheapest place in town. Only $200 an eye! It was structured like a used car commercial. I always thought to myself…..you know, if someone is going to perform surgery on my eyes, I probably want to go with the best guy…not the $200 an eye job. I don’t see legal services being any different.
2. Cheaper price means you need more clients: It’s simple math. The less you sell your services for, the more clients you will need. You have now created a business that is more volume based. To get more volume you are going to need more leads, more marketing, more hours, etc. This doesn’t mean it can’t work, it just is a fact. Something to think about before deciding to lower those prices in the hopes of more clients.
3. Your demographic changes when you sell on price: This is the point made in The Rainmaker Blog article. It’s important to think about the type of client you desire beforehand. What type of demographic does your client fit into? What is their socio-economic status? What do competitors of yours charge for the same type of client? Just be aware that lowering your price will not necessarily get you more of that type of client. You will get a different type of client that is attracted to your lower prices. The trick is to find ways to market, appeal to, and get in front of the type of client you desire. Simply lowering your price is an easy way out.
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