Price Transparency; about as clear as mud
Following the SRA’s recent announcement that it is back on the case with pricing transparency Today’s Conveyancer caught up with pricing expert Nigel Haddon to talk about the do’s and don’ts of pricing, and what you need to know about the SRA’s Price Transparency regulations.
The frustration from my point of view is the pricing transparency requirements don’t really do what they are supposed to.
The objective is to help consumers make informed decisions about instructing legal services. In their current form, all they do is encourage consumers to simply “website hop” to try and find the “best deal.” Most of the pricing is indicative with text like “prices start from” and heavily caveated.
This is not a criticism of law firm websites. It’s simply a product of complying with the guidelines in their current form.
No two client matters are the same.
Take a conveyancing transaction. Most firm’s approach is to set a fixed fee depending on the value of the property. That’s OK if the firm is happy to play ‘swings and roundabouts’.
But no two conveyances are the same; different properties, sellers, buyers, expectations, title issues, timescales, FTB and HTB premiums.
When it comes to drafting a Will surely you need to understand the client’s situation, needs and wishes before you can fully understand how you can help, how much of your time it will take, and therefore how much you will charge.
There is of course a commercial balance here; many firms have now adopted a fixed fee model and I am not saying that a fixed fee model is wrong; I simply want to challenge firms around understanding their cost base and their clients before setting a pricing structure.
It’s about understanding the value you provide to your clients and managing their expectations. For example, in the current climate do you reduce your fee because you are not spending time travelling to visit clients in their own homes to draft Wills for them
One way is to introduce a tiered pricing structure, not based on the value of the property (although you can include this if you wish) in which you set different client expectations depending on how much they are prepared to pay. Bronze/Silver/Gold; Good/Better/Best.
First time buyers are much more demanding on your time than seasoned movers. There is an argument that they should be charged more, not less which is the case in so many of the cases I see, often for understandable long term reasons.
Price transparency serves only to boil legal services down to a single common denominator, price. There is very little opportunity to truly convey the value of your offering; which is the foundation stone of pricing.
Pricing for value ensures you also have one eye on profitability, something which is lost in the fixed fee “race to the bottom.”
It’s important for firms to find their space in the market and to understand it’s OK to turn to work away because it’s not worth doing; its ok lose work on price.
Giving people choice is important and shaping that choice around their own circumstances and approach to price risk can work for both you and the client.
Having an hourly rate option, fixed fee options and for example conditionality enable you to tailor your service around what the client really needs and wants.
How many conveyancing firms are currently charging a premium for trying to move their clients before the SDLT deadline? How many have incentivised their quotes in such a way, so that if you are successful you earn more?
By doing this it’s a win/win… the client saves on their SDLT and you receive fair recompense for the extra effort.
It’s OK to recognise the laws of supply and demand in your pricing. Indeed, a 20-30% increase on your June/July prices is easily justifiable. Where matters are genuinely urgent, there is justification for a more significant rise.
And it’s possible to do all of this within a fixed fee structure, you need to better understand your clients before you engage them around price.
The crackdown may see greater compliance with the letter of the regulations, rather than the spirit of the regulations. Price transparency is currently not helping anybody; consumers cannot get a clear idea of how much their legal services need is going to cost them, and solicitors who seem unable to differentiate their offering from one another.
I have no doubt it could be much more effective with changes to the current regime but at the moment it is a regulatory burden that is not achieving it’s goals.
Nigel’s top tips for price transparency compliance
- Provide a clear pricing structure on your website
- Make it clear your pricing is based on certain assumptions and identify circumstances in which it could/would change
- Encourage those who engage with your pricing to contact you directly for a discussion to enable a more detailed fact find
- Outline a set of value principles that the business is “bought into” and which can be conveyed clearly to clients, for example, that the firm believes in offering clients pricing options, not a ‘take it or leave it’ price
- Train staff to understand pricing, profit and loss and empower them to price more effectively