“The price of something is often an important determinant of its perceived value, as Dan Ariely points out in Predictably Irrational.” Two writers add in the Harv. Bus. Rev., Vol., Vol. 86, Dec. 2008 at 31, “If you discount prices purely to boost sales, buyers may begin to question that value.”
Those who set billing rates at law firms recognize the brand message their hourly rates signal. They are reluctant to debase the brand by discounting the rates. Oblique ways to lower prices exist. For instance, Chrysler held to its sticker price but subsidized the gasoline a new car would use. Another company kept prices the same but discounted its financing terms. Smart marketing, perhaps, for a law firm would be if it “couples the appeal of a discount with an implicit message about the value of the core product.” An astute law department might ask for non-discount discounts.
A law firm might offer a substantial chunk of CLE training for free, with the training increasing as the hours worked by the firm increase. Or, it might throw in some measurable value of technology support or joint knowledge development for free. Perhaps rates stay firm, but a secondee is made available at a loss-making rate.
Maybe in-house counsel see through the ploy; maybe it does not matter. Money saved is money saved, and yet the core value proposition of the law firm – high fees for high quality – remains intact.