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The Latin term for price is pretium. However, closer investigation reveals that pretium also means “value”. In other words, the Romans had the same word for price and value: pretium = value = price; something that is at the core of every economic transaction.
Value is the most important aspect of price, price management and pricing policy. Or, to put it more precisely, the value perceived by the client. The willingness of clients to pay and therefore the price targeted by the firm are always just a reflection of the perceived value or benefits of the advice and service being provided – nothing more and nothing less.
Giving two sides of a transaction the same word, the Romans understood the fundamental connection between price and value. Interestingly, Latin gives us a second linguistic meaning that goes in the same direction. Pretium facere (literally, “set the price”) also means, ask for a price (from the buyer) and offer a price (from the seller).
A transaction takes place only if the law firm and the client can agree on a common price. Many law firms are unhappy about the prices they have been able to achieve in recent times. The lowest price offering always seems to come out on top (that is not the reality but it is certainly the perception). Many law firms providing a high standard of advice and service feel defeated amidst the low price craze.
When law firms raise the issue of permanently discounted headline rates, poor realisation and recovery rates and the like, I have three questions; first, what part of the market are you targeting or is your natural habitat? Second, what added value and benefits do they offer that your competitors don’t? And third, do the firm
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