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You know that old story about the frog in the pot?
The frog is in the pot of water on the stove. The heat is turned on. The temperature gets turned up one degree at a time, getting warmer and warmer. The frog doesn’t notice because the increase in temperature is gradual. Eventually, the frog boils to death.
The frog doesn’t realize what’s happening.
Are You the Frog?
My dad handled some real estate closings when he was practicing law. Back in the early ’70s, I asked him how he got paid for his work. He explained that he got a 1 percent fee for a closing.
In the early ’70s, he got a $400 fee for handling the closing on a $40,000 home.
Today in North Carolina, lawyers still do real estate closings. My dad did them 40 years ago for $400. How much are the lawyers around Raleigh charging for the same service?
They’re charging around $400. Often, they charge even less.
Do they realize that their fees haven’t changed in 40 years?
That’s not good.
Are Your Prices Going Up?
Is the same thing happening to you?
What were you charging two years ago? Five years ago? Ten years ago? Don’t trust your memory. Go pull up some old records and check. Find out whether you’re raising your prices.
I’ve got a consulting client who discovered that he’s actually charging less now than he was five years ago.
In examining his pricing, we talked about how his prices would have gone down. I asked him what happened, and he started rambling. He mentioned potential clients calling on the phone and asking about price, he talked about young lawyers charging less, he talked about being more efficient over time. He had a hodgepodge of ideas about what happened, but nothing was clear after we talked. He hadn’t wanted to lower his prices, but it had happened, and he wasn’t really sure of the origin of the change.
The Heat Is On
When you don’t have a plan, it’s easy for your pricing to slip out of control. The next thing you know, you’re charging something random with no relationship to your value, your market, or your client’s perceptions. Pricing is important. It’s way too important to handle haphazardly.
For now, the important thing for you to do is to figure out what you’re charging now and what you’ve been charging historically. The answers to pricing questions come from data, and your awareness of your pricing position is a critical starting point.
Dig out your old files and fire up your spreadsheet. Now is no time to turn into that frog. The temperature is rising, and you need to figure out how hot it is before it’s too late.