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When is it time to raise your billable rate?
When you want to buy a new BMW. Just kidding, sort of.
Deciding when to raise your rates depends on a number of factors, but always involves calculating the bottom line: how much do you need to stay in business?
Assuming you have the authority to raise your rates, raising them is a move that will chart your financial destiny. If you are an associate, a different fate applies.
For the self-employed, the formula for the right billing rate is a mixture of business needs, market demands, competition, and ethics.
Model Rule 1.5 is a good place to start and avoid problems that some lawyers have when they just charge too much. The rule sets forth standards for charging a reasonable fee.
Once your conscience is clear, it's easier to fix a billing rate. Figure out what you need to stay in business, and there you go.
Of course, what you need and what the market demands may be different. For example, if you bill at $400-an-hour but nobody hires you, something is wrong with your math. (Maybe you don't need that Porsche, after all.)
Here's where the competition can actually help you. Look at what other firms charge, and factor that into your analysis. If you charge less for the same service and do a little marketing, you should be able to get more business.
On the other hand, some attorneys charge far more than their competitors and thrive at it. They basically create a market of their own.
And it's all good to drive a Rolls Royce, unless you get it by charging unconscionable rates or breaking the rules.
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