WHAT THE RIGHT PRICE IS

Starting a price war (reducing your fees as a competitive advantage) is like the Prisoners dilemma, if you hold the line the fees will be high enough and even higher for everyone but if you fail to hold the line on fees you then horribly low prices all across the board.

A fact to help clarify your thinking is that there is such a thing as too cheap to be true. If the price is ridiculously low then quality is questionable. This is NOT a fixed rule and client's will have to learn to differentiate between quality and price, seeking if there is a connection.

Crazy as it seems, everyone suspects whether cheap stuff is the best quality available or whether it is even of high quality and since there is no objective means of assessing a lawyer's value before the service is provided, clients look to high prices , appearances and name recognition.

The low priced, non-lawyer competitor who gives questionable quality legal work and who clients go to is another factor to consider when setting the fees at your shop. Plus they will not always remain of questionable quality and will co-opt or compel lawyers into the fee levels they have set by being able to participate in the market at a cheaper price, without the regular lawyer's overhead.

The usual levers to stave off the competition include cost reduction, increasing yield, manufacturing justification for price increases and actual Innovation: creating a new product or service, NOT a line extension.. Actual research and development.

The moral here for setting the right fees is to do less with more (automate, outsource, project manage, use repeatable processes), to reduce your costs to the lowest point possible where the highest quality is guaranteed and no lower.