Price cuts?

We recently covered JetBlue's dramatic new All-You-Can-Jet pricing program (see "JetBlue and alternative billing"). It struck me that if an airline can offer unlimited flights (for a month) for a fixed price, then companies in other industries — including law firms — could do something similar. Well, just the other day, my wife and I were walking down Boston's tony Newbury Street when we saw this sign:

$495 per year unlimited haircuts. Includes: Haircut • Scalp Massaging Shampoo Conditioning Treatment • Shoeshine & Beverage plus 10% off all services

The company providing the service is called Barbershop Lounge. (Warning: when you go to the website, some mildly annoying Euro-technopop starts playing. Why do web designers do this?) The company pitches itself as a high-end men's salon, and it has done a nice job of getting some press. (See this Forbes article.)

Here's what I like about this from a marketing point of view. The fixed price tells me that I'm going to pay this much and no more, no matter how many haircuts I need to get in the next year. The sign spells out all the things I get in this deal:

• The haircut. OK, well that's sort of a table stake.
• Scalp massaging shampoo. (I would have used a hyphen after "scalp.") Most places are going to wash your hair before cutting, because it makes it easier to cut. Scalp massaging sounds nicer, although it kind of has to happen anyway. How else do you get the shampoo into the hair?
• Conditioning treatment. I think that's just a fancy way of saying "conditioner." But kudos for that.
• Shoeshine & beverage. OK, that's something new. But I'd pay $5 for a shoeshine and another dollar or two for a soda, so I'm happy.
• 10% off all other services. That's where the real genius comes in. Get people to come in for the (relatively) inexpensive haircut. Make the real money by cross-selling higher-value services. Brilliant.

Most companies are too afraid to make an offering like this. As I mentioned in the JetBlue post, they worry that someone might take advantage of them. "What if someone comes in every day and gets a haircut? That's 260 haircuts [they're open five days a week], at an average price of $1.90 a cut. How can we make a profit on that?"

Again, dumb question. Most people won't get a haircut a day. A few may get more haircuts in the course of the year than usual, but many others will end up getting fewer. Rather then focusing on the average price per cut, the company should be looking at the total value of the client relationship. Barbershop Lounge obviously is.

Lawyers: are you going to admit that a barbershop is more sophisticated in its pricing than a law firm? How would you do something like this in your firm? Or would you? Share your thoughts in the comments.

In the meantime, don't be afraid to take a little off the top.

Comments

[Frank Roche]

What a great idea! I was saying to 10 people at our consulting firm here (after I read your article aloud)...Hey, we should offer 10 of us to do writing, graphic design and software development for a year for some multiple of a million dollars. How cool...we really are thinking about this. Seriously.

Thanks, Jay.

[Ted W]

With a limited menu of services, this could work. Unfortunately the example does not correlate with personal legal services such as estate planning, domestic law, such as divorces or business creation.

Business support would work, and many lawyers have retainer agreements with individual clients (ie smaller governmental entities where full time lawyers are not the norm).

The direct challenge does not yet help.

[Andrew Woolley]

We have been offering fixed fees for divorce and international divorce in the UK for some years, examples here: http://www.family-lawfirm.co.uk

Clients love them!

If you have to give a very good estimate for what hourly rate work will cost what is the difference?

Back your ability. Initially your lawyers will claim it can't be done, but it can you know.

Put clients first before your competitors do.

[Greg George]

We recently announced a flat rate which includes deeper research criteria covered for due diligence backgrounds — this has been received well.

Fraud and corporates cases still billed by the hour, but if you have done a specific task for clients long enough, such as due diligence research or the divorce example shared by Andrew; you can provide exceptional professional services while remaining very cost effective for your client — and trust me, they do appreciate these type of efforts.

Another plus for the flat rate fixed fee approach — this allows the client to budget and plan work needed accordingly.

And yes Andrew — always put the client first.