Tara (00:50):
Welcome back to the Art of Estate Planning podcast. It is Tara here, and in this episode I am just giving you some unsolicited advice and probably sticking my nose into your business, but I'm hoping that this little pep talk is going to set you up for success for the end of financial year.
(01:14):
So I was actually sitting at my desk. I wasn't meant to be recording an episode today, but I was inspired. I think inspired is the right word, but it's hard to say that this was an inspiring activity. But I was sitting at my desk doing my renewals with the Queensland Law Society, so we're renewing my practising certificate, renewing my professional indemnity insurance, and it just got me thinking it's that time of year again, we are in the runway to the end of financial year, and depending on the type of work you do, I think that can mean different things for different people, right? If you are a transaction and deals based lawyer, so if you do estate planning but you also do restructures and commercial deals, then you might be starting to feel the pressure with the end of financial year coming up and all of those transaction deadlines.
(02:15):
If you don't do anything with financial years, then 30 June is probably just another date for you. I am of the school of thought and the practise where 30 June was just the biggest day of the year. We had all these restructures to settle, and June was our biggest month by far, and I don't have that in my life now, but I cannot shake that feeling and those habits of going, oh my god, 30 June is coming up. So coming up, it got me thinking, and one of the things I was thinking about is having a conversation with you all about is it time for a price rise? Because you might start noticing all these price rise emails coming into your inbox where everyone is just pushing up their prices a little bit more, and that's fine. We're in a cost of living crisis. There's inflationary pressures.
(03:19):
Do you need to raise your prices too? So whether you decide that you do or you don't, that's entirely up to you. But I would love for you to actually make a conscious decision about whether it is time for you to make a price rise and when was the last time you actually did raise your prices, the inputs into your service delivery increasing without a price rise and eating into your profit? Are you just absorbing that for your clients or is your pricing actually where it needs to be? And you have reviewed it quite regularly. So I think there's two things I really want to focus on today is a price rise and the marketing strategy around that. And then also that this could be a really good time for you, especially if you are starting to see an influx of price rises on the products and services you use to reevaluate your profit margin and see if it's hitting the targets that you want.
(04:27):
So let's start actually with the signs that it might be time for a price rise. Okay, so here's a few signs where you might want to think about raising your prices. Firstly, if you are feeling booked out stressed and super busy, which I love for you, that you are booked out, but I do not love that you are feeling stressed and super busy, and maybe it's a case of you're spreading yourself too thin and you're too available, obviously too available with your time, but your prices aren't high enough. So you are actually bringing in all kinds of clients, not just your perfect ideal client. Sometimes increasing the price means you can earn the same amount, but work less or work the same amount and earn more. So if you're starting to feel booked out, stressed and super busy, maybe you're actually working at over capacity and increasing your prices will be a natural way for some of those people who aren't ideal clients to fall away and to allow you to be in the really beautiful sweet spot of having enough work, but also having enough time and space to serve your clients well.
(05:43):
And I know increasing your prices can really trigger this feeling of scarcity. Like if I put the price up, I'm not going to get enough clients. But you have proven to yourself, if you've already booked out, if you've got a wait list, you've proven to yourself that what you are doing is working and there's enough demand for your service. I really think you've got enough space and buffer there to test what increasing the prices could do. I suspect it actually isn't going to really change much in terms of your demand at all. If anything, it might ease the pressure a little bit, but I don't think you'll feel like you've gone from a million clients to no clients. The next criteria number two is if you find that you have been attracting difficult clients or clients that you feel resentful towards, that could be a case of, again, tying into what I just said, you are not pricing yourself to meet the market of your ideal client.
(06:47):
So if you feel like you've had an influx of those lately, increase the price. See what happens. The third criteria or sign is if you are regularly being given the compliment, I've got that in inverted commas, that you are very affordable. Oh, I'm referring so-and-so to you because you are so affordable. Do you want to be affordable? Do you want to be known as an expert? Do you want to be known as a gun in your area? Is affordable really in alignment with your brand position? And is that the only reason they're referring to you? I mean, I love this quote, someone has to be the most expensive. Why can't it be you? Now, I'm not saying that you do have to be at the absolute top of the market, but there's something about actually the more you charge, the more people equate a higher price to a higher service.
(07:46):
They don't question, oh, this person is an expert in their field. Oh, their price is too high. They just go, oh, well of course they're an expert. We're going to have to pay that price. They're entitled to that. So sometimes we can almost get in our own way. So I think if you are being told that your prices are very affordable, you can afford, pardon the pun, to nudge them up a bit. So that also ties into receiving referrals or clients telling you that they're affordable. And also if you find that clients don't even blink when you tell them the price either they just come back if it's an email communication, they come back right away and accept the price or they just go, yep, no worries. When you tell them in person, now it's up to you where you want to position yourself, but sometimes you might find that you can go a little bit higher in your price and clients might just sit on it for a day or a week and then come back and accept the higher price.
(08:52):
I always kind of thought, oh, I'd agonise over my fixed pricing and send it off, and the client would just come back right away and I went, oh, I'm too cheap. I didn't, there's a misalignment with the value. So when it comes to pricing theory, a lot of this ties into value pricing theory, and in our estate planning pricing toolkit package, we have a detailed training on value pricing theory. And basically what it is is a matching of value and we're pricing to try and match that. It's a win-win exchange of value between the client and us as the lawyer. So if you having the client basically go, yep, come back straight away approved, then maybe you are not putting enough weight on what the value of your service is. Tying into what I've already said, if it's been a long time since you've had a price increase, I really think that you'll find that your price rises for your inputs have soaked up some of your profit margin, and you may not be making as much profit as you anticipated.
(10:08):
So of course you can wait until it's time to do your tax return, which is going to be obviously a lag indicator. We won't find that out for a few months, whether you've made as much profit as you wanted or less profit than last year. Another way to do it is to use the break even calculator in the estate planning pricing toolkit. So I think now is a really good time to talk about the breakeven calculator in our estate planning pricing toolkit. So I worked with an accountant, Andrea from Dream Accounting, and she put together this incredible spreadsheet, oh, have we ever heard those words in one sentence? Incredible spreadsheet. It actually is though it's user-friendly, it's easy for you guys to use. She even gave a training on how to use it and how to think about it, which helps you determine what is the minimum that you need to charge to make the profit you want based on the costs of running your law firm, including paying yourself super, paying yourself a decent living wage, what it would cost if you had to pay someone else to do that work.
(11:22):
And I think it's a really important exercise because when we sit here and go, oh, this is what I should be charging, it's a great reality check when you actually look at, well, this is what it costs me to deliver that service. I think when we factor in, it's just our time. It's just me giving up my time when I could be at the beach. We feel selfish for charging, but when you break it down into cold, hard numbers and you look at, you have to pay for a roof over your head, you have to pay for food in your children's bellies. What else could you be doing and earning money for? And not to mention all the little inputs that add up, even the printing paper clips the paper that they sign it on, the fees that you have to pay. I just think I paid like four figures, maybe it was like three and a half thousand or something for my practising certificate renewal, and I don't actually do a lot of legal work anymore.
(12:25):
So if you are actually running a full firm, your PI premium is huge. When you've got to carry the overhead of that cost and factor that into each individual matter, it's quite eyeopening how your profit margin can be eaten into really quickly. So if you were starting to see all these price rise emails coming in, my accountants increasing their prices, zeros, increasing their prices, zoom your insurance, all the software, your practise management system, that all adds up. So if you're seeing all of those, maybe start setting them aside or sit down and have a look and do a bit of an audit about what are you going to renew this financial year coming and put it into the spreadsheet in the pricing toolkit and just say, well, yeah, are we actually meeting our profit target here with our breakeven calculator? So I'll take a little break there.
(13:32):
I know that sounds very unsexy doing the spreadsheet, but there's a lot of emotion that comes into the idea of setting our prices and raising our prices. And I want to say two things. Looking at the cold hard facts and numbers takes that emotion away. And also no matter what you are charging, you are enough. The price is just the price. It is not determinative or reflective of your self-worth, and it is just the reality of running business. So you don't have to take it personally. And I think even if this sounds scary and icky, if you are like a numbers looking at pricing gives you the ick. It doesn't hurt to have this information to make a decision. And once you've got the information, then you can at least be informed to then go, okay, can I make a decision about the prices that's in alignment with my values, my market position where I want to be, my branding and my ideal client? So let's take a little break. I'd love to let you hear from one of our beautiful clients, Jessica, about how her experience was when she recently invested in the art of estate planning precedents and the TT Precedents club.
Jessica (14:53):
Hi, my name is Jessica and I am a sole practitioner from Sydney. I joined the out of estate planning three months ago, and I can honestly say it has been the best investment in myself and for my business. The knowledge that I have learned in the past three months has been invaluable, and I can confidently and comprehensively advise clients on their estate planning knowing that every situation, every estate plan is different and have their own complexities. If there is something that I am not sure about, I can tap into the wealth of knowledge in the TT Precedents club. So I know that I have the support of the community members from there. I had seen the reviews before I joined, but I never knew it was going to be this much of a transformation. If this platform was available for all practise areas of law, I truly think it would transform the whole legal industry. I cannot recommend it highly enough.
Tara (15:48):
Okay, so hopefully that's given you a little minute to think about are you ready to raise your prices? And if you are sort of sitting there going, I think that might be on the cards for me, then this is perfect timing. So I wanted to really make sure I released this episode around the start of June and end of May so that you had time to think about your strategy for the end of financial year. Because if you are thinking that it's time to raise your prices, I don't want you to just raise the price and not tell anybody. This needs to be done as a well thought out marketing strategy and done with integrity. So I know you all act with integrity, and it might even sound counterintuitive, but being clear with your communication is kind and being open and transparent is acting with integrity.
(16:47):
So what I suggest that you should do is tell everyone about the upcoming price rise and say it's a one July price rise. Explain the reason Due to the increase in inputs, we have had to increase our prices due to me becoming a kickass lawyer and getting better every year. We have had to raise our prices, whatever the reason is, but be clear and transparent about it. The people who don't respect your decision are not going to be your ideal client anyway. So I think it's really important to say, Hey, we're raising our prices in a month or six weeks. It's going to be this price on one July. Put it in your newsletter, post it on your social media. Even send people an email just about the price rise to say, Hey, if we are offering a special end of financial year package where you can book a meeting after July, but lock in the pre price rise package now, if you've been on the fence, this is your sign that you've been waiting for and it's the kind of thing then that will motivate people who've been on the fence or if you've got long time followers or prospects who are looking for a reason to take action.
(18:09):
So I really think leading up to the end of financial year, people are getting very used to seeing this type of communication from a lot of companies. They understand the reason, leverage that and make sure that you are communicating it too. And what I really love seeing is people are almost going on their socials or in their emails. I see this with a photographer who does my beautiful brand photography, other estate planning lawyers, all kinds of service businesses are saying, Hey, we're booked out for May or we're booked out for June, but if you want to get this done, I've got two spots available in July, is one of them yours? And tie that in with the price rise. And it's a very compelling reason for people to take action and decide if you have got any more sophisticated clients who have things like that might be tax deductible, like family trust succession or corporate powers of attorney.
(19:10):
It could be a beautiful time to make a marketing campaign around corporate powers of attorney. So trading companies or trusts that need to put in this entity power of attorney solution where there's a sole director so that there's a triage plan if something happens to them that can be billed and deductible to the business. So make a campaign to say, we're putting up the price, and by the way, get lock that in the deduction before 30 June. Be really proactive and communicate it in a way that sits with you and integrity. And I think you'll find that that just really helps you feel honest and open and transparent about the price rise. While I'm talking about this, you might be wondering, well, what about clients who have accepted a quote or in partway through their matter? So I would say clients obviously where you're in the middle of an engagement, the price rise only applies to new clients, new prospects honour the pricing that you've already given.
(20:17):
Of course for clients where you've given a quote and they haven't gone ahead. I mean, this is a really good time to talk about the costs agreement terms that come within the estate planning pricing toolkit. So not only does that toolkit have training on value pricing, price list templates that are forma templates for you to choose from and rebrand and put your numbers into. It's got the break even calculator spreadsheet. It also has, and this is almost one of the biggest parts of that toolkit, the cost agreement terms. So we have set up and set out lots and lots of cost agreement terms that are tailored specifically to estate planning matters and things that can go wrong on an estate planning matter. And so in those terms, we've got very clear parameters around how long quote or fee proposal lasts before it expires, what the obligation is of the client to communicate to you and how many times you'll follow them up.
(21:26):
And then when new pricing applies. So if you've got someone who's accepted a quote, but they're dragging their heels and they aren't communicating or delivering what they need to so you can complete the work, it protects you from those clients and it will also protect you from clients where you've given a price and then they haven't accepted it. So hopefully you've done that. If you haven't got the cost agreement terms in place to protect you, then you might have to honour those old prices. But this is a beautiful term, time to revisit what your terms are. Are you protecting yourself? Are you making it really clear to the clients? And then also tie that in with a new price rise. So look, it's an emotional topic pricing. Some people don't care. Others do find it really icky and they don't like doing it, but it's important to running a business because you're not working for free and you need to provide for your family.
(22:28):
You have worked so hard on your education or the sacrifices you've made to get your law degree to set up your law firm to run it. We are not a charity. It's an exchange of value. Clients aren't going to respect and see value in your service if you don't see the value yourself. So this is, as I said, probably sticking my nose in your business a little bit. But I hope this episode gives you a little bit of food for thought coming up to the end of financial year. And as I said, someone has to be the most expensive. If you are sitting there thinking, I don't know what to charge, I have no idea. Then in the estate planning pricing toolkit, we also have training on what I think you should be charging. And we compare what law firms around Australia are charging for their testamentary trust matters.
(23:25):
We are looking at rural, regional, boutique, inner city, capital, city, all the firms and what they're charging to give you an idea. So you can obviously run your own race, but you can use it as a bit of a benchmark to see and also as a bit of inspiration. So I do hope this episode has been inspirational or at least got you thinking. And if you decide to do nothing on your pricing, great. At least you have made a proactive decision that your pricing is appropriate and where it needs to be instead of it just being something that you haven't even turned your mind to. Thank you so much for tuning in and I look at you next week.
