"This work is a loss leader for more profitable work"

I'm not a fan of this framing for a couple of reasons:

1. The work rarely generates a true loss, where delivery costs exceed the fee income, rather it just generates less profit than you'd perhaps like. A subtle distinction, but it creates a dynamic where fee earners only begrudgingly do this leading to a poor client experience

   
   

2. It rarely leads to more profitable work because the 'loss leader' tends to anchor the client's price expectations at a low level that makes greater profitability difficult to achieve in practice - "But you did the work for us at price X last time, why are you charging us y now?"

But, quite apart from being neither a loss nor a leader, the concept does capture something essential about offering multiple services that complement one another

In The Legal MBA, we articulate this concept differently through the idea of a value ladder:

𝟏 - 𝐅𝐫𝐞𝐞 𝐯𝐚𝐥𝐮𝐞

This could be educational materials such as blogs or content on the sector pages on your firm's website. It might be a free consultation with prospective clients, or a template they can use themselves

𝟐 - 𝐅𝐨𝐨𝐭 𝐢𝐧 𝐭𝐡𝐞 𝐝𝐨𝐨𝐫 𝐬𝐞𝐫𝐯𝐢𝐜𝐞 

This service priced lower than your core offer, and is often a fixed fee. It is not a loss leader - it's a profitable component of your overall service offer. It may be a standardised diagnostic, risk assessment, or desktop review of your client's existing policies or contracts

𝟑 - 𝐂𝐨𝐫𝐞 𝐨𝐟𝐟𝐞𝐫

This is what you really want to be selling and delivering. There should be a natural follow on from (2) - "our standard diagnostic has identified issue x, we propose y to address this". This may be your traditional hourly rate work, but not necessarily

𝟒 - 𝐎𝐧-𝐬𝐞𝐥𝐥 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬

This may be bespoke advisory work that falls outside the scope of your core offer. Alternatively it may be an cross-sell of services delivered by other practice groups. For example, for an owner manager selling their business, there's potentially cross-sell opportunities into tax and estate planning beyond the core offer of we'll advise on the acquisition 

𝟓 - 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐩𝐭𝐢𝐨𝐧 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

This may be a monthly charge to access a hotline, ongoing access to templates or data, or a monitoring service relevant to the core offer

You don't need all of these components - it's ok to consciously decide not to offer a subscription service, for example

But framing your offers against a value ladder enables you to provide a more holistic service to your clients and provides relevant value outside your core offer that deepens the client's relationship with your firm

And within the practice group it better aligns the different services and stops the "loss leader" being the poor relation no one wants to work on

What do you think? Join the conversation on LinkedIn