We discussed this issue back in September and, looking at the discussion going on over on LinkedIn, it seems as though the debate isn’t going to abate.
The American author Ron Baker has written at least five books on the subject of pricing – although you don't need to read every word of every book. He demonstrates that you can make real money out of fixed prices if you take the trouble to know the client, and to set up the pricing conversation properly. This is a question of demonstrating value to individual clients.
We personally know an accountant who runs a small (4 fee earner) firm doing largely one-off project work who claims that by using these pricing techniques he has earned over £1million in additional fees over the past 5 years - compared to his standard hourly charges. I have no reason to disbelieve him.
Can it be done in legal work? In many cases, the answer is yes. But it is not as simple as thinking up a number and sticking to it. And sadly, many lawyers (encouraged by their performance measurement systems) are unwilling to put in the upfront effort, either in learning the techniques or getting to know the clients.
In work where the price is externally determined, the focus has to be on identifying and improving cost of production. This will be the focus of an article we have appearing in the Gazette’s In Business section in the spring. Any thoughts would be much appreciated.