Pricing – Raise our prices? Are you crazy?
Many readers will have seen the recently published research by Morar Consulting for Veyo. To remind you, a few of the headlines were:
- 42% of consumers were unsure that they would use their conveyancer again;
- 60% found dealing with their solicitors the most stressful aspect of the process;
- 27% chose their conveyancer because of the price being the lowest, making it the fourth most important factor in choosing a solicitor;
- 25% said they would pay more for a faster service.
Why would a firm seek to raise prices in this dog-eat-dog world? When one in four choose their lawyer on price and price alone, where’s the mileage in exploring raising prices?
The answer lies in the questions. If every law firm competed to be the cheapest, who would win? Not your firm dear reader. That is a race to the bottom that nobody can win. So how, against this competitive, consumer-empowered backdrop, can law firms push back?
In business literature, commoditisation is defined as the process by which goods and services that were distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. Critically, it is the movement of a market from differentiated to undifferentiated price competition. It is the received wisdom of the residential conveyancing market that that is the position we now find ourselves in. But is that so?
Differentiation is not confined to large firms or high value matters. Pricing and service level options can be used very effectively, in isolation or combination to create significant visible differentiation around wills and powers of attorney, divorce, pre-nuptial agreements and residential conveyancing.
One of dozens of examples includes the option of a ‘premium-priced’ residential conveyancing package that includes up to two home/hospital/rest home visits by a legal executive/paralegal – one to take instructions and one to get documents signed. This is a proven and very popular option with the elderly, the immobile, the unwell and those without easy transport options. It is this kind of differentiated offering that helps you stand out from the crowd.
Almost anything is capable of differentiation. If this were not true, how is it that Fortnum & Mason can charge £5.95 for a pot of orange marmalade compared to £0.27 for substantially the same thing at Aldi? Answer – maybe there’s a clue in the names – ‘Aldi Everyday Essentials Marmalade’ doesn’t have quite the aura of ‘Highgrove Duke of Rothesay Marmalade’. Who would know if there is much actually to differentiate the two products (although one would suspect there is)? More obviously, would anyone seriously suggest that the shopping experience is the same at both? And yet Fortnum & Mason is as busy and as profitable as it has ever been.
The firms that differentiate themselves most effectively are those that have identified aspects of their culture that make them superior service providers in their area and then communicate those advantages to the market in a consistent, compelling and memorable way.
There is clear evidence that home buyers are willing to pay more for a fast track service, so the opportunity is there for firms which are able to demonstrate both speed and efficiency.
Firms must resist the temptation to buy into the inane and demonstrably wrong assertion that legal services are all becoming commoditised and therefore you have no option but to slash your prices to preserve market share. There will always be people willing to pay for the ‘Highgrove Duke of Rothesay’ product provided you give them good reason to do so. If you don’t give them reason to do so, you will never command anything other than ‘Everyday Essentials’ prices.