Pricing Predicament

How can I figure out how much to charge for my product or service? What is the highest salary (raise) I can ask for? Talking about money is a thorny issue. Everyone has opinions about it but those underlying concerns are:

-Did I set the price so high that no one will buy? (Is the salary I asked for so outrageous that they will hire someone else)

-Did I give them such a low price that they question my value or did I leave money on the table? (Is the salary I asked for so low that they wonder if I know what is going on in my field?)

This month I had three different experiences that involved pricing.

First my mother showed me a pair of shoes that she got through Medicare. (She is a diabetic and evidently Medicare will pay for one pair of shoes a year.) She told me she would never order them again. Why? Because the doctor charged Medicare $500 for the shoes and she thought that was far too much money. (She watches the government’s money like her own!)

Next a friend told me most of her colleagues were telling her to charge more for her services. She was adamant in her stance that no one was worth what they were telling her to charge. In fact her colleagues were in the same business and commanding the fee they were recommending to her.

Finally in the news once again one of the presidents of a large company here in the US (Exxon) was reported to have negotiated a huge retirement package.

Finding an appropriate price is not easy. There is a lot of psychology in pricing along with some mathematical computation. Sometimes people forget to think about the mathematical piece. The cost of delivering the product or service including the time of the deliverer is important. If you do compute your actual costs you can then add a percentage on top (margin) to give you your profit.

Seems simple but now you’ll need to see what others are providing. How does your product compare with those it competes with? This is the market research part of pricing. If you are negotiating salary for a job, you’ll want to know what others who do similar work get for that job.

Now here is where the psychological factors come in. Price something way above what the competitors charge and you could price yourself out of business – maybe or maybe not. Perhaps your product is like no other that it competes with. In my mother’s case maybe there is only one manufacturer of shoes for diabetics and each pair must be made individually to that person’s specifications? The price may in fact be justified.

Price something way below what the competitor’s charge and it is possible you will be very busy. If you haven’t done the cost analysis, you may find yourself losing money though. Another possibility is that potential customers may question your value. “Why are you so cheap?”

Justification – that is what is necessary. In your sales pitch you will need to tell the potential buyer what makes your product so special. (Why you do charge so much or so little.) If my friend doesn’t really believe that she is worth more than she’ll have a hard time convincing others that she is. Clearly Presidents of large corporations have no problem with their sales pitch and are really good at convincing boards of directors to pay them huge sums.

“Whatever the market will bear” is often the philosophy you hear. It certainly must be the justification of the presidents and CEOs who get big salaries, bonuses and pensions. In my opinion the answer lies somewhere between my friend who doesn’t think she is worth that much and the big company pay outs. That is a place where the business owner gets what he/she is worth and the consumer gets the value he/she expects. For me there is also integrity involved in pricing not just what the market will bear.

Take Action

1. Assess your own work situation. Where are you undervaluing yourself? Write down a list of the benefits you offer to your customer (employer).

2. Check your competitors. What do they offer? How do they price their offer? Compare their offer to yours. How are they alike? What is unique about your offer? How do you tell your customers about that uniqueness?

3. Not unique? Why would your customers choose you instead of your competitors? If your uniqueness is price alone, you are on a slippery slope because there are always others ready to price below you.

Timesheet Lawyers and the Billion Dollar Swindle

To begin, let’s review how a lawyer will typically bill you or his/her advice. Consider a $500 per hour lawyer. At that charge rate, you’d expect the lawyer to deliver at least a 7 out 10 in terms of professionalism and of course the more you pay, the more your expectation that your deliverables and legal outcomes will tangibly be worth the money you’ve paid. But wait, lets tote up the costs of this lawyer and see if you math holds up to introspection.

At $500/per hour you’d expect an income for this legal beaver not too exceed 960,000 assuming a 48 hour year, a 5 day week and an 8 hour day. Not a bad income you may argue – and by the time you take off overheads, taxes and other expenses running a partnership, then perhaps this person nets $500k plus in a year. But you’d be wrong – how wrong will surprise you. In fact 960,000 is actually the base minimum this lawyer will make in a year; however we can go on to calculate the theoretical maximum this lawyer can earn, and blow a few cobwebs out of the window as we do so.

To illustrate the size of the problem, we must first factor in the costs of ’rounding’ that our legal beaver administer to their charge rate. Most (not all) legal professionals charge in what’s called whole minute intervals. Some practices may charge at 6 minute intervals, some at 15, others at 30, and the real hogs of the trade a whopping 60 minute units or more. So for example, if you call your lawyer to arrange a meeting, your one minute phone call will cost you 1 unit of time. This is how lawyers charge, and why their costs are so expensive. However, the problem is deeper than this as we shall now find out.

Let’s return to our competent lawyer who charges $500/hour with a fifteen minute rounded interval. In this instance, your one minute phone call will cost you $125. You may be surprised by this, and argue that the ‘itemized’ bill would should these costs. However, if you’ve ever received a hefty lawyers bill, rarely does it detail anything beyond a cursory summary, and your 1 minute $125 phone call simply gets lost in the noise of all the other zeros.

But we can go further. Now we’ve isolated our lawyer’s exact costs, we can go on to calculate the theoretical maximum this individual can earn in a single year. We do this by assuming that each second of the day can be used to do a piece of work, and as such each is billable as 1 whole 15 minute unit. Doing the math, the maximum earning potential for this individual is $864,000,000. Who else do you know can earn anything between a million and a billion dollars a year?

Clearly, when a lawyer bills you $125 for your one minute phone call, the remaining 14 minutes of time (which you have already paid for), can be used on a different client, meaning that your lawyer is charging you for time he/she is spending on other client work. This is commonly known as double dipping, and as you can imagine, there is considerable amount of grey when it comes the legality of this state of affairs.

Well, greed is the obvious answer as to the why whole units are used, but in addition, we must also remember that lawyers are timesheet driven, and were the first to realize that you couldn’t really use a timesheet to record a 1 minute telephone conversation, most especially if it took you 3 minutes to actually write the entry down in you pen and paper time ledger. Of course with the computer, timesheets (time sheets, depending on your location), became part of the digital era – with one thing missing. Developers simply ported the manual-entry timesheet into software, not because it was their only course of action, but because electronic timesheets were a big enough leap forward from the old pen and paper time logging process previously employed. Having it all centralized came next, and dumping the process onto the web an obvious part of this organically evolving process.

However, in the early part of this Century, with more powerful computers and a more beefy operating system, software developers started to look more closely at the whole time tracking process and realized that manual entry timesheets were now redundant, as new and innovative automated time tracking software (such as MetriQ, one of the first in the field) could be used to control the entire time management process. Other software companies have also started to take a look a closer at how to reduce the time errors, inaccuracies and other costly problems inherent with manual and electronic timesheets, a growing dissatisfaction with the time recording process, and the excessive costs of legal advice.

If you have a need for legal or accounting advice, and you don’t want to pay through the nose for time spent doing someone else’s work, then insist your practitioner uses a hands-free time tracking software solution, to track time efficiently, comprehensively and in a way that you can ask to see, down to the nearest second, how your lawyer worked, and how their time was exactly used for your benefit, and no one else. Timeshe technology has peaked, and with a change in technology that releases many of the inherent problems associated with this time attendance paradigm, meaning that we should hopefully realized a more open, a more transparent way for businesses to measure time, providing the opportunity for them to work in a fair and equitable way. Yes, I know I’m dreaming, now you too can start dreaming, and together, our thought will start to change the universe.

Personal Injury Claims – A Road to Justice

Justice is the word that is associated with all the civilized nations of the world. It is made sure that the culprits and the guilty ones should pay for the wrong deeds they do to others. Law is the most important tool through which the deliverance of the justice is made possible. Personal injury claims are one such channel through which it is made possible. The claimants get the deserving compensation and the guilty ones have to pay for their deeds in form of monetary compensation. These cases are a very important art of the law proceedings all over the world where it is made sure that the victims should be compensated for their pains and the guilty ones should be penalized for their recklessness and neglect.

Personal injury claims involve the petition of those who become the unlucky victims of one or the other type of accident. These victims have to go through a physical injury, mental agony or property damage that are the resultant of that accident which has happened due to the recklessness of another person. These accidents can be the road accidents, the workplace injuries, the cases of falling due to slipping or tripping or the accidents involving the malpractice by any profession like medical malpractice. All these types of accident make a lot of victims turn into claimants seeking the compensation for their losses and pains.

There are specialist lawyers who are there to help these victims. They help these claimants from the basic step of determining the nature of the accident to the final step of getting the justice in form of the grant of the compensation. The specialist lawyers can be found related to the specific genre of the personal injury field. And it is always advised to get the consultancy from these lawyers as they guide the claimants in the best manner and they present the case in the favor of the claimant. There are those lawyers also who offer to file the cases on the no win no fee basis where the claimant has to pay not a penny in both cases- winning or losing.

Settlements are also a way to get the compensation claim and this refers to the off the court settlement between the claimant and the third party insurers. Otherwise, the case is sorted out in the court room. The claimant seeks the compensation for the pains and losses ha has suffered as a result of the accident and this counts a lot for him if he gets this monetary relief.

These personal injury claims are definitely an active channel through which it is made possible for the deserving claimants to be compensated via monetary relief.

The contents of the article are provided for informational and educational purposes only and are not intended for a legal advice.