Make Money Mondays: One Price Doesn’t Fit All

Most lawyers would never admit that they pretty much charge the same price for everything.  For example, one lawyer might argue that his rates are only $250/hr – a real bargain as compared to so-and-so down the street who bills out at $500.  Yet I’d be willing to bet that even with the one lawyer charging half the rates of the other, there’s probably not much more than a 10-15 percent difference in the overall costs.  Because even though the rates differ, the methodology – ye olde billable hour – remains the same.

The same can be true of flat fees also. Most lawyers charge several thousand dollars even for largely automated documents like trusts, uncontested divorce or contracts because of lawyers’ review and oversight or necessary administration (such as filing with the courts).  And up until recently, it could be very difficult to find unbundled service.

But when it comes to pricing, lawyers aren’t alone in being one-dimensional.  Even creative industries like streaming television services can be limited in pricing options as described in a recent Harvard Business Review article, Why is Every Streaming Service Using the Same Pricing Model?. Turns out, that though price points vary, nearly every streaming service, from Hulu to Netflix to HBO charge an all-you-can-eat flat fee for content even though viewers may only want to see one or two programs.   The HBR article offers several different pricing solutions:

• Metered.  A channel could meter usage by number of shows or viewing time. A handful of volume-based plans can be offered: low, medium, and high.  
• Good Better Best Offer a line of packages with content segmented by content type (series shows vs. films), exclusivity (original content vs. available on other services), and release date (new vs. six months after release). Usage restrictions include “ability to binge watch” (yes/no), viewing time (all week vs. only weekend), and device (mobile vs. television).
• Discounts to Incentivize Commitment.  Streaming services typically only offer month-to-month plans. This pricing strategy makes it easy to turn services on and off. (In theory, I could watch all of Succession by subscribing to HBO Max for just one month.) Volume discounts — committing to a period of time — can be employed to reduce customer churn.

Lawyers could take a lesson from these ideas to create services that match customer needs. For example, if you have clients who can meet only on weekends, why not charge a premium for weekend service? If a client is willing to wait several months before documents are prepared, charge a lower rates.  For clients willing to fill out complicated intake forms and use automation, a lawyer could charge a lower amount for services.  Instead of asking other lawyers how much they charge, lawyers must realize that price is not something set in stone, but something that can be molded and changed to fit the services offered and value provided.  Once the legal profession jettisons the billable hour and concept that lawyers need to charge what everyone else does, a world of pricing innovation can open up (so long as ethics rules don’t get in the way ) – and that can  make for increased competition and access to justice.