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March 09, 2009

Let Your Clients Decide Your Price

One of the biggest barriers lawyers must overcome when contemplating alternative pricing models is understanding just how customers perceive the value lawyers provide. 

One of the ways I've combated this in my consulting practice (and at LexThink Innovate) is I let customers set the price of the work I do -- after it is done.

Below is a copy of my "You Decide Invoice" that I use for all my consulting work.  The relevant provisions read:

YOU DECIDE: Your absolute satisfaction with LexThink isn’t just our goal, it’s the measure of our worth -- and the determination of our fee. The rules are simple: you pay us what you feel we were worth to you. You decide, no questions asked. The only rule? We want to know why you paid what you did, and how we could have done better.

and

WHEN TO PAY:  While we leave our fee in your hands, we can’t leave it there forever. Please send us  your payment and feedback within 21 days after you get this invoice.  Please send a copy of this along with your feedback and your payment.  Thank you for your business.

On the second page (not shown), I ask for feedback from the customer:

Tell us, in as many words as you want, how we did. Think about your expectations, the result, and how it felt to work with us. Also, let us know if we can share your feedback with others -- and if we can give you credit. Attach more sheets if you need to.

That's it.  I explain to the customer before they engage me that they'll set my price, and then give them the invoice as soon as the engagement's done.  So far, I've always received at least as much as I've expected -- and most importantly, usually more than I would have charged if I'd set my price before beginning. 

I also know that when I will ultimately receive less than I expect (or not get paid at all), it will tell me I need to learn lessons from the engagement, and improve my services (or be more selective with my clients) so it doesn't happen again.

What's keeping you from experimenting, and letting a few (trusted) customers name your price? 


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Comments

I could see this novel idea working for short consults with sophisticated clients. But I’m skeptical beyond that. Can you share some more details about the types of matters this has worked for, the time spent on the project, and the demographics of your clients?

What is stopping me is that my clients are not sophisticated enough to understand the value I add. Frankly, while they are smart and very successful, they do not see the difference between a lease bought at Office Max and one tailored to their situation -- until something goes wrong that is. Also, we are unfortunately in a business that charges for advice that friends freely give one another, so folks who are friendly with you think you should give them a little advice for free, after all it doesn't cost you anything to tell them what they need to know.

That being said, I am all for alternative billing and set flat fees whenever possible.

Matt,

What a great idea! I am looking forward to implementing this at the next workshop I conduct. I will keep you posted as to my results.
Thanks for the creative recommendation!

Chad Estes

Should one expect this to form a binding contract? If not, why the 21 days? It's not like you're actually going to send them to collections after that time period, right?

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