Pricing mistakes

15 May 2008

We have seen many examples of good and bad pricing policies. The following is a list of ten of the most common mistakes law firms make when pricing their services and services.

Mistake #1: Law firms base their prices on their costs, not their clients' perceptions of value.
Mistake #2: Law firms base their prices on "the marketplace."
Mistake #3: Law firms attempt to achieve the same profit margin across different practice areas.
Mistake #4: Law firms fail to segment their clients.
Mistake #5: Law firms hold prices at the same level for too long, ignoring changes in costs, competitive environment and in clients' preferences.
Mistake #6: Law firms often incentivize their partners on revenue generated, rather than on profits.
Mistake #7: Law firms change prices without forecasting competitors' reactions.
Mistake #8: Law firms spend insufficient resources managing their pricing practices.
Mistake #9: Law firms fail to establish internal procedures to optimize prices.
Mistake #10: Law firms spend most of their time serving their least profitable clients.

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