Does the price of mediation services have anything to do with the value of those services? One of the most difficult tasks for any professional is to set a price point for their services. In many ways price defines value for most of our clients. We look for niche practices and sometimes forget that price is in itself a niche.
It is difficult to find out what mediators in Ontario are actually charging, since few are prepared to talk about it, but anecdotally it seems that some mediators charge $100 an hour while others charge $500 an hour? Daily rates also range from less than $1,000 to $7,500 plus.
Even more interestingly it is the mediators at the higher end of the price range who seem to be the busiest! These same comments and observations apply to lawyer's rates which in the GTA run from $200 an hour to $1,000 plus.
How do you get it right? Is there a relationship between what you charge and how the value of your services is perceived?
A recent article in Why We Love Our Dentists , looked at the relationship between the price paid and perceived value. Based on data gathered in the US by behavioral economist Dan Ariely, it seems that people love their dentists more than any of their other medical providers. Why?
The reason appears to be cognitive dissonance which is, "the human tendency to react to conflicting evidence by doubling-down on our initial belief". Although it sounds a bit strange to say the least, the author of the study attributes our irrational love of dentists to the pain they inflict:
The article has other examples of irrational behavior influenced by perceived value and is worth reading.
What does this mean for mediators and lawyers? Since many lawyers and mediators deal with clients when they are in some type "pain", maybe we should rethink how we approach this problem. While this flies in the face of complaints that professionals charge too much, it seems that our clients believe that the value of our services is directly related to the price they pay for it.
In other words, if you are a mediator or lawyer offering the lowest prices for your services, then your clients may believe your services are less valuable than the same advice offered by your higher-priced competition.
From my experiences as a mediator, it has become clear to me that many litigation clients think that the chances of "winning" their case are related to the fees they pay. I am not talking about emotional or financial investment made in the case but more, "my lawyer is better (ie more expensive) than your lawyer"!
This may also hold true for mediators. Although it may be heresy to suggest this, the chances of a successful outcome may be related to the fees charged by the mediator.
One mediator I know commented on this point:
I began my career by thinking I would charge less than other mediators to encourage business. I don't think that worked. And I specifically had some clients tell me that my price was too low and I should raise it (because it raised suspicions that I was not as good as my competitors).
I also wonder if whether lawyers or mediators who offer lower-cost services see themselves as less competent or not as good as their competition?
In any event you should shop around and ask for prices. One of the key elements of revisions to the Rules of the Civil Procedure is proportionality in costs. But remember highest or lowest is not necessarily the best for your case.
What do you think? Is pricing an art or a science? If you have the time, please e-mail me with your comments.