The ubiquitous Seth Godin recently posted an article to his blog that is relevant to the recent discussions we’ve had on this blog related to Premium Pricing.  You can view his post in its entirety here.  His point is essentially that it’s easier to make a million dollars selling a $10,000 service to 100 people than it is to make a one dollar profit selling to a million people.  The point is exaggerated for emphasis, but nonetheless it is still a valid point.

As lawyers running our own law firms the question we should ask ourselves is whether the pricing strategy in our law practices more closely resemble Wal Mart or Neiman Marcus?  There is an entire discussion that can be had on exactly how to command premium fees in your law practice, and I plan on addressing that very issue in the free e-book on that subject that I’m publishing the next couple of weeks.  But, first you have to understand it is a superior model.

I know a divorce lawyer who has been practicing 30 years (twice as long as I have) and whose technical skills are very well respected in his community.  However, he takes the Wal Mart approach - low fees, high volume.  I have often been opposite him in cases where, despite my having half his experience, I made literally two to three times the fee he did in the case.  When he and I talk about this he essentially admits he is afraid to raise his fees.  He thinks he will lose business.  He doesn’t realize that would be a good thing (despite my repeatedly telling him so).  He could double his fees and even if he lost half the volume (which he wouldn’t because of his reputation) he’d make more money, work less and be able to deliver a higher level of service to his clients.  That’s a win all around.