Have you ever struggled to set prices for your business?
It feels like the question everyone has been asking lately – how much should I be charging for my services? Both those newer to the industry and established conveyancers seem to be umm-ing and ahh-ing about what is appropriate both for customer satisfaction and business success. Let’s go through some of the factors you should consider in setting fees for your conveyancing business.
Consideration 1: Transaction Type
The first underlying consideration should be the type of transaction. This includes not only just the simple question of what type of interest your client is registering, but also the more nuanced considerations that come with the type of transaction.
For most purchasers, this may be the largest transaction of their life, if not at least, of their life so far. While some purchasers may be somewhat price-sensitive due to the significant financial outlay, many will also be comforted to know that there is someone there who is taking careful time to complete their transaction with diligence. In reaching a pricing balance, both you and your client should consider any potential unexpected events which may attach to the transaction. Numerous contract reviews, unexpected disclosures or registered interests can affect not only settlement success, but also impact the amount of time spent on the transaction. Customers are reassured knowing that you have considered any potential surprises and knowing that you are ready and able to deal with them.
As an experienced property professional, you will take the time to explain to your customer what the transaction entails, as well as making them aware of any potential surprises which may add time & complexity to the transaction. This will establish clear expectations around time, service value and level of care.
Consideration 2: Your Business
Step one for pricing goods or services in any business will include some level of consideration of the business costs. These would include such things as your staff wages, rent, amenities etc. All too often, conveyancers will consider their fees with direct reference to other firms, and not consider any real points of differences between firms that will impact these costs. A firm with a team of 10-20 staff members, located in the middle of the CBD is likely to have significantly different overhead costs to a sole proprietor, working out of the spare room in their home. Take the time to consider these costs and apportion this figure across your expected workload.
The other consideration you should make about your business, should be around your service delivery. Some firms will define “success”, as being able to complete transactions as efficiently as possible, with as little client contact as necessary. This business strategy may see them utilising large economies of scale to maximise their return. Alternatively, some firms may seek greater efficiencies in process to enable them to provide MORE time directly engaging with their clients, thereby maximise word of mouth referrals and customer satisfaction to achieve business success. These differing approaches will impact on the direct cost of a transaction and should be considered when setting conveyancing fees.
Consideration 3: Your Ideal Customer
A key consideration we find most conveyancers and firms will forget when setting their conveyancing fees, is who their “ideal” or “target” client is, and how their pricing structure will attract or detract them from their business. Many of us will have experienced the dreaded customer: the one who seeks the best deal possible. However, if we do find ourselves giving in and lowering our prices for this customer, it ends up being more hassle than the transaction is worth. The client has bombarded us with questions, or complicated the process by seeking to take shortcuts. In the same way that our logo, website and advertising materials can help us attract our ideal client, our pricing structure should also be considered as an equal contributing factor alongside these. If your firm is more of the “economies of scale” type – your marketing communications may include phrases like “hands-off property settlements”, or “no-frills conveyancing”. Your fees will be lower, and these factors may appeal to a business client who makes frequent acquisitions. In contrast, if your communications include phrases like “guiding you through your first-home purchase”, or “clear, careful and caring conveyancing services” with a higher fee, this will appeal to a first-home buyer who is feeling uncertain or confused about their property purchase. These clients will be reassured that they will receive the time they may need to ease their concerns.
You should ensure that your pricing is consistent with your messaging and marketing communications to establish and manage client expectations and attract the right clients to your business.
Consideration 4: Pricing Structure
Another consideration which will differ between conveyancers and firms will be the way in which they charge their fees. While some may offer all-inclusive services pricing, others may charge disbursements separately. Both options come with their advantages and disadvantages, but conveyancers must ensure that whichever option they choose to use is clearly explained to any potential clients. A client expecting disbursements may be put off by a quote of $2,200 – as they may be expecting another $400- $600 of disbursements may follow when they have actually already been accounted for in the initial figure. On the other hand, a customer may be overjoyed to receive a quote for $1,800 but may experience some nasty bill shock when they are invoiced for $2,200- $2,400 if the disbursements were not clearly explained. Bill shock or the misinterpreting of quotes can both be damaging to your business thanks to negative word of mouth, so it is important to understand different pricing models, and ensure whichever you choose is clearly communicated.
Consideration 5: Personal Value
The final (and possibly the most important) consideration to make when setting conveyancing fees, is that your pricing is a reflection of your worth. Conveyancers are specialist service providers: usually highly experienced in their field, who are empowered to execute legal transactions on behalf of others. This is not a casual industry! Despite this, we often see conveyancers who are unable to realistically recognise and measure their own professional value. Spend some time to reflect on your formal qualifications, number of years of experience, professional memberships and associations, commitment to CPD and ongoing education, the value of your networks, and the level of service you provide to your customers. All of these things carry value that needs to be reflected in your pricing!
Undervaluing yourself and your services is the quickest path to burnout, which continues to be a leading issue in our profession. If you’re still unsure, think about the professional services you engage with on a personal or business level. Would you pay more for a hairdresser who has been cutting hair for 30 years, or one who has been cutting hair for 30 days? What about an accountant? Would you let your friend who has been googling tax law for a couple of days lodge your return, or would you look for a registered accountant who has completed their professional certifications and been practicing for decades? I’m sure most of us have the same answer!
Conclusion: It’s all about managing expectations!
The five factors listed all have one underlying theme – the need to manage expectations. So long as you are able to clearly communicate what your service offering is, and how you will deliver value to that customer, there is no real wrong answer! At LodgeX Legal, we partner with conveyancing firms to enable more efficient processing of transactions. The firms we partner with find both an increase in their client satisfaction thanks to improved settlement success rates, as well as an overall decrease in costs to the firm thanks to newfound time savings and process management – even after they have accounted for any additional fees payable! Happier customers will usually mean more work for your firm, and happier staff, and so long as these expectations are clearly communicated and understood, setting your conveyancing fees really is up to you!