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Aug

12

Value Based Billing: “How much is it worth to you?”

Michael CarabashSo, over the past few weeks, I’ve randomly selected clients who wanted to retain me for legal services and asked them: “How much is this worth to you?”. Before asking, I had an idea of how long it would take for me to do the work and how much I would charge at my hourly rate. The interesting thing thing is that the clients responded: “This is worth X to me” and that figure or range was usually bang on with what I had in mind!

So why did I do it if the figure was going to be the same? Well, for starters, when it comes out the client’s mouth, you have less convincing to do around the value of what it is you’re going to do for them. Next, they seem like they’re getting a great deal because they don’t even hear what you were thinking. They’ve also fixed the price (it’s not: give me a big retainer, I’ll bill you hourly and we’ll take it from there). And finally, once empowered, they now feel more relaxed in asking you for additional services knowing that they can come up with the value of those services. So, at the end of the day, the client was happy with the price and a happy client is more likely going to be a repeat client or a referring client.

Now mind you: this type of value based billing might not work for all types of work. These clients just so happened to need customized independent contractor agreements – something I am very, very familiar with. In litigation, for example, with all the varying factors that could impact time spent on a matter, taking this approach might not work. Indeed, asking a client how much it is worth to them and then getting a ridiculously low figure in response may put you on the defensive and have to attack your client for their lack of understanding. This may not bode well for either of you. So be selective with your clients and the type of work that you’re going to do if you ask: “How much is it worth to you?”

So try it: select a client, get an understanding of what their requirements are, discuss the legal services you’re going to provide, and when the time comes to discuss price, ask them: “How much is it worth to you?” You’d be surprised at how happy they are with the end result.

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