Price transparency: why you should pay attention

As you probably know, the Law Society of Scotland has issued guidance on pricing. This is similar to the position in England & Wales, where the SRA introduced rules on pricing transparency in 2018.

So, what does this mean for member firms? This article will look at the pros and cons of price transparency, and discuss pricing best practice and the opportunities price transparency creates. 

Towards a consumer-centric legal market

The genie of price transparency is now well and truly out of the bottle. The measures introduced by the SRA and the Law Society of Scotland are more than likely the start of a drive towards a more consumer-centric legal market. Driven by consumer expectation, the legal industry will surely now come into line with other sectors. Industries like insurance, banking, healthcare and even utilities providers offer a much more buyer-oriented experience than law firms. 

To that end, the Legal Standards Board has mooted a number of measures pursuant to increasing transparency and facilitating choice. These include legal-specific “comparison sites” and making complaints information publicly available. 

That is still in the future. The challenge here and now is to address the issue of pricing. There are two implicit questions here: the questions of how much you charge and how you convey that information. These are entirely separate issues, but there's almost certainly more latitude in the former than you expect. And there are definitely more benefits to the latter than you think.

Price-scepticism

Whenever we discuss price transparency with clients the reaction is usually sceptical, if not outright hostile. The most common arguments are obviously financial. Businesses naturally fear anything that will impact their bottom line. Among the most common retorts are:

“Price War!”

“Race to the bottom!”

“Service will suffer!”

All these arguments have some merit, at first glance. Yet, the negative outcomes only arise in the absence of a coherent strategy around pricing and marketing. In fact, as I will argue, such a strategy turns this challenge into an opportunity.

How has price transparency come about?

These measures have been introduced to put the consumer first. A report published by the Competition & Markets Authority on the legal services market in England & Wales in 2016 showed that some consumers were put off seeking legal advice because of worries over affordability. 

In other words, consumers feared “sticker shock” – the negative surprise a consumer feels when discovering something is more expensive than anticipated. 

I remember wandering into the Mulberry handbag store on Glasgow's Ingram Street as an impecunious law student, intent on purchasing a birthday gift for my girlfriend – trust me, sticker shock is very, very real.

Handbags are one thing (she and I are still together), but legal services are another entirely. Failing to take legal advice because of a (possibly unfounded) fear over money can lead to greater emotional and financial loss down the line. 

It's easy to imagine how intimidating and awkward it could be for a member of the public to find themselves in an office, with a solicitor, being presented with a figure they hadn't anticipated. Research shows that the human brain will go to extreme lengths to avoid such awkwardness – including refusing to act in its own best interests!

Price sensitivity 

The arguments against published pricing proceed on the assumption that pricing favours the cheap. But does it?

When was the last time any of us made a purchasing decision based on price and price alone? Did you buy the cheapest car? The cheapest bottle of wine? 

Price may be a factor in choosing between two competing but otherwise equal alternatives, but it's seldom the only factor in a decision. Value, quality, service, availability, necessity, brand, perception, reviews, risk avoidance, trust, first impression, perception... these all form part of a customer's decision, to a greater or lesser extent, depending on the customer and the purchase in question. It's why Waitrose and Aldi (for example) can happily co-exist.  

What is your price point – and who is your market?

Another key assumption we must challenge is that of price elasticity in legal services. Price elasticity is an economic measure that shows the response in demand to a product when nothing but the price changes. This is to ask the questions: 

1. How price-sensitive are your clients?
2. Can you charge more without harming demand?
3. Will a reduction in price bring about a concomitant increase in demand?

For most law firms with whom we work, the answers are:

1. Not particularly.
2. Almost always.
3. Hardly ever.

Price-point shoppers

This leads us to what is probably the real heart of the matter: handling price-point shoppers.

Every business offering a service struggles to some extent with price-point shoppers. This market segment is usually the most difficult to profit from. They require similar levels of time and effort (and thus cost) inputs, but do not generate as much revenue. What's more, their first loyalty is usually to price, so they are easily lost to cheaper alternatives.

The only viable strategy to profit from this market segment is to carry out very process-driven commodity work – and that isn’t a particularly popular business model in the Scottish legal sector. Not yet, at any rate.

If anyone has had a positive outcome when dealing with a client who has Harrods tastes on a Home Bargains budget, please let me know!

Publishing prices – the arguments in favour

As I mentioned earlier, when speaking to lawyers the issue of publishing prices is never far away. This was true long before the SRA and the Society turned their attention to the issue. Traditionally, lawyers have chosen not to publish pricing for many (good) reasons. However, the arguments for are more compelling.

We live in a digital world

The internet has given web users the ability to research and shortlist potential suppliers. Even the least technically literate can compare products, goods and services like never before. And with more and more Scottish law firms improving their web presence and digital strategies, Scottish legal consumers have more choice when searching for legal services.

Nowadays, we expect to find the information we need to decide in seconds – including prices. And if we can’t? We move on to some place where we can. 

To be part of the price conversation

Anyone buying anything instinctively looks to price as part of the decision – even though it often isn’t the deciding factor. If they can’t find a price, you’re not part of the equation.

To own the conversation

One of the goals of publishing pricing is to control the dialogue around the price and value of your offering. Not only can you provide potential clients the numbers, you can control the narrative around the pricing model and the value you deliver.

In doing this, you can adduce testimonials and case studies from satisfied clients and (subtly) point out the pitfalls of instructing cheaper providers!

Remember, there is an innate sense from buyers that the low-cost provider is never the best, and there is more assumed value in a higher priced product.

To capitalise on search engine traffic

If you begin typing searches for legal services into Google, you’ll see suggested results related to “cost”, “price” and “fees”. This means people are searching for it. 

You can get some quick wins by creating a pricing page and optimising it – bringing interested, purchase-ready traffic to your website. 

To reduce your prices

This might seem counter-intuitive, but a pricing page is the perfect place to capture leads by having discounts and offers. People are attracted to a discount, and offering some might be the key to generating a bit more business.

You get what you pay for

Consciously or subconsciously, we associate a higher price with higher quality. This is why pricing is so important in building your firm’s credibility and reputation. When you publish your prices and explain the reasons why your client should pay you more than your competitor, you’re subconsciously conveying your value.

To qualify leads

Published pricing helps to qualify customers before you commit time and resources to consultations and a sales process. Indeed, when consulting with our existing clients, the conversation often turns to how we can help them get fewer – but better – enquiries.

Every firm we speak to has a problem with “tyre-kickers”, or people trying to get free advice. And most law firms aren’t well set up to deal with timewasters. Calls are often routed straight to fee earners who become embroiled in (sometimes lengthy) discussions that have no hope of ever turning into fee-paying work.

It goes without saying that improving your conversion rate for desirable business is more profitable and efficient than handling a large volume of unqualified enquiries. Having your website disqualify unprofitable enquiries is the path to a more efficient, more streamlined, more profitable business. 

Publishing prices – the arguments against

“It’s not done in the legal industry”

Now the SRA and the Law Society of Scotland have pushed for it, it will be. And once it becomes the norm, your clients will expect it.

“Our competitors will see it and undercut us”

Lawyers seem to be acutely sensitive to corporate espionage of this sort, to the extent that we’ve seen sophisticated calculators created to try to get around such regulations. Indeed, the SRA guidance has foreseen this and covered the use of such calculators. 

While there’s certainly an element of truth to this argument, there are solid arguments against it which we’ll explore below.

“We can’t exactly predict costs on any matter”

Again, this can be true and often is. However, providing a means of estimating potential costs is better than hiding pricing from view. 

Pricing legal services is inherently difficult. Obviously, this makes publishing pricing equally difficult. 

However, both the SRA and the Society have made allowance for “indicative” costs and hourly fees. 

“The price will drive potential customers away”

Price is what you pay. Value is what you get. As long as that equation works, you’ll be fine.

You'll get fewer enquiries

Possibly true. However, think about the type of enquiries you want. Do you spend too long dealing with tyrekickers and clients who can’t (or won’t) pay you? It’s also worth remembering the findings from CMA research mentioned above, which suggest some people avoid talking to a solicitor altogether if they think they can’t afford it.

Pricing tactics, or, how not to get dragged into a price war

There are a number of tactics you can employ to offset the fear that a visitor will arrive at your pricing page and leave.

First of all, you need to support your pricing model with a solid value statement that is represented not only in words but in the look and feel of your website. Clearly, high-end pricing on a cheap website is unlikely to win business! 

The key question is value. What do your clients get in return for your prices, and how do they benefit compared to your competitors? 

Don't just publish this information. Make it an integral part of your business development strategy. Use your website to address your customers' objections both before they raise them and before they choose a competitor.

Final thoughts

The internet is an enormous, fluid marketplace that enables all of us to search, to compare and to find the best deal. Publishing your prices is a bold statement about the value of your offering.

If you can save your ideal client the extra effort of having to ask for your prices, you save time for both of you. What's more, you’re also a step ahead in establishing trust – and that's priceless.