A Balancing Act Set Your Fees So You Don’t Cut Profits Out of Your Rates Would you sell something for less than what it cost you to make it in the first place? The answer is no, but you probably do it unintentionally in your own practice. • Let’s start by looking at the three broad categories that your fees (flat or hourly) should cover. • Overhead. • Labor costs of delivering the work (even if you are the one doing it). • Your profits as a business owner. The profit component represents your reward for all the headaches you endure while running and managing the firm and the staff and for taking the risk and initiative of starting your own business. Solo attorneys are often tempted to leave out the profit category when setting their rates. They think the only way to stay competitive is to set low fees that cover only the overhead and labor costs. Unfortunately, doing so will prevent them from growing their firms. Why is that? If your fees only cover overhead and your own labor costs, you can never hire anyone to supplement your work. If you do hire staff, you won’t have any margins left after paying them. This is one of the most common reasons why attorneys stay solo and are unsuccessful at growing their firms. • One-third of your fees should generally cover all your marketing and overhead. • The second third should cover the cost of labor. If you are the one doing the work, then this third is yours. • The last third is your profits as a business owner. If you don’t have profits, you are cutting yourself short and practically creating a job for yourself. Look at your monthly income statement to find out whether your revenues cover the overhead, labor costs, and your profit margin. If not, it’s time to review the numbers and make a few changes! HOW WILL THE NEW TAX CODE AFFECT YOU AND YOUR BUSINESS? Find out about it on our Thursday Live Roundtable Calls! Register for free here: BeyondTheNumbers.club How can you set fees? A good starting point is the rule of thirds.
Now, to Murrell, the other panelists, and the channel’s 1.5 million subscribers, Amazon is the company that makes things right. Who wouldn’t want to do business with a company that takes care of them?
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Need help setting up these reports, especially with delegating the responsibility of collecting this information? In most cases, you, with the best of intentions, do not have the time to gather this info. It’s your responsibility to look at it and interpret it, but you don’t actually have to pull it together. If you don’t delegate that part to your bookkeeper, office manager, or significant other, it won’t happen. We can help set up these reports so they require little effort on your part, and you’ll get a clear picture of where your company stands financially. Figuring out which existing systems can provide the pieces and how to pull them all together? Please don’t hesitate to reach out to us for help! Need help interpreting your numbers? More clarity about how can your business be more profitable? Finding the hidden efficiency-suckers? We’re here to help you! Like our new friends who requested the VIP day, let’s make this the year when you finally see a clear picture of how your firm is doing based numbers and facts, and not just your gut feeling. This will be your first step to bringing home more profits in 2018! –Borbala Banto, CPA Need help with setting up your weekly or monthly reports? Identifying what to measure?
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