What if Law Firms Priced Like Apple?
Apple is a juggernaut; currently the most valuable company worldwide by market cap (over half-a-trillion USD): it also has over $100 billion in cash on hand.
It wasn’t always that way. For many years Apple was an also-ran in computer sales. Apple’s Mac line was seen as too expensive, and this premium pricing policy made some think that Apple would stay a nice little tech company always in the shadows cast by Microsoft, Dell, and HP.
When Apple branched into consumer products such as the iPod and the iPhone, the “premium pricing” tag was still there. I have heard some lawyers explain their firm’s pricing strategy in similar terms, sometimes even invoking Apple directly. They use words like this: “We are not for everybody; people are willing to pay more for quality.”
But an interesting thing has happened with the iPad. Apple not only created a new category of a tech gadget, they priced it aggressively as well. One recent article explained it this way:
Apple’s size, and the fact that the iPad shares components with the highly popular iPhone, means that the company can buy crucial parts such as processing chips and display screens at lower prices. Any company that wants to make a tablet computer that matches the iPad’s $499 starting price has to endure higher costs.
So the latest iPad is offered at a price competitors can’t match feature-for-feature (and have similar margins). And Apple doubles-down by offering the prior model at a discount, further knee-capping the wanna-be competition.
If we move back to the law firm analogy, I understand that tech products and legal services present different delivery challenges and market opportunities. Nevertheless, what if certain law firms started to offer defined services for a lower block rate to their best customers? This could be for off-the-shelf information plucked out of knowledge management systems or owing to enhanced productivity gained from experience managing outsourced work.
What clients know is this: even at the best law firms, not all work, and not all lawyers are equal. Communicating the willingness to pass savings onto the best clients for certain work positions a firm as a leader, rather than a member of a fraternity that’s showing its age.
Apple is taking a long-term view of market share and customer satisfaction. Such a simple strategy. Perhaps that’s why it appears so radical and refreshing.