Should I discount my fees?

Should I discount my fees in order to bring new clients in the door?
First, I'll start by saying that if your fees are based upon value to the client, and determined on a case by case basis in consultation with each client separately, the issue of 'discounting' may never become an issue at all.

That being said, even attorneys that use billing methods other than hourly billing sometimes find themselves grappling with the issue of discounting. I have had personal experience with this, even when establishing fees with certain clients based on value to them - whatever the fee is, they want a discount. (This may be a red flag that this isn't the client to deal with).

Lawyers that have more of a 'commodity' practice may also consider discounting their fees, particularly when starting out, attempting to break into a new practice area or a new market, etc.

I don’t recommend discounting your fees. Once you ‘discount’ your fees, clients and possibly potential clients will know that you ‘can’ do the work for the lower fee, and in their mind, the discounted fee will become your actual fee. Discounting a fee for a client often brings nothing but headaches and trouble.

Whether we like it or not, most times we equate higher price with higher value. We think if something is more expensive, it must be ‘better.’ Since that’s the way most people think, discounting your fees- or charging too little - de-values the service you provide in the eyes of your clients and potential clients. Often, if the fee is too low, people will wonder what’s missing from your services or whether you’re experienced or knowledgeable enough to handle their case.

Rather than giving a discount, consider giving something extra, like a 'bonus' – throw in a free ‘something’ – free risk assessment, free additional consultation, free review of something, etc. Make it something that has value for the client but isn’t really cutting into your fees. What you offer need not even be directly related to the service that you are providing for the fee. And always be sure to articulate the value of the services that you’re providing for your client within the fee.

For example, if you want to do work for small businesses and become their ‘go to’ lawyer, you could provide a risk assessment as a ‘freebie’ as part of your incorporation/startup package (although you must still make sure that the fees you’re charging are making you a comfortable margin for your services). This kind of bonus has the added benefit of educating the client and possibly showing them the value of preventative legal representation.

Whenever you give something away for free, make sure you indicate the value of the service you’re ‘giving away.’ In other words, if you’d do a risk assessment on its own for $1000, your materials should clearly state that the package includes a “risk assessment worth $1000” or similar language.

Although I don’t generally condone discounting, there are certain times when you can discount your fees for certain clients, at specific times, or for defined purposes. But those discounts should be part of your overall marketing and pricing strategy. They should only be provided on an individual basis or for a particular purpose, and only after special consideration.

For example, you might want to take on a particular case for a reduced fee if it will be a significant case that will help build your reputation or credibility, or provide experience you would be unable to obtain under other circumstances. You might consider discounting your fee for a particular charity, cause or individual in need.

Many lawyers give discounts to clients on a regular basis without even realizing it, and without keeping control over those discounts. Are your clients paying your bills in full and on time? If not, you’re not getting the rate you think you’re getting – you’re actually discounting your fees. The client that always pays late and requires constant reminders before they’ll pay is costing you money – both in the real sense of having to wait for your fees, and in the time, effort and aggravation involved in chasing down payments.

If you determine that a particular case is worth taking for a reduced fee, or even no fee, that’s your prerogative. But make sure that you can articulate a sound business reason for giving the discount, and make sure that you’re making the decision – don’t let your clients make it for you by simply not paying.

Comments

[SusanCartier-Liebel]

Allison,

We share similiar viewpoints on discounting fees. I know there has been alot of commentary on this. Please check out my blog and review my post "To Solos: Don't Discount Your Worth" which was featured in the Connecticut Law Tribune and on Law.com.

[Allison Shields]

Paul-

Thanks for sharing your experience.

I agree, value should be the focus any time you are setting fees. But there will occasionally be times when you want to give a client a 'break' for one reason or another, and in those circumstances, I recommend providing an extra service of some kind, rather than discounting fees.

Allison

[Paul]

I agree with you about the risks of discounting fees. When I started my practice last year I wanted to be more cost effective (read "cheaper") than the likes of my former employer. The problem with that is that people tend not to value the work, even if it is subconscious, and I found myself running into problems recovering fees from people.

I think the solution is to rather focus on value and charge a normal fee for the work.