As directed, the purpose of this memo is to analyze the costing approach of the main service of the company so that company can increase its profitability and fuel its growth.

US Legal Support is working in the legal services industry. Our firm advises clients both individuals and corporations about the legal rights and responsibilities they possess and also represents them in business transactions, civil or criminal cases, and in other issues and instances where the legal advice and other assistance are required.

The Legal Services Industry is broken into two major functions reporting and records. In the Reporting segment of the industry involves the court related matters and depositions which are carried out by court reporters. The particular services which our firm provides in this regard include scheduling a deposition, Complex Asbestos Litigation, Multi-Party Case Management, Legal Video graph and Transcription Services.

Our company has a strong history of the successful provision of court reporting and is providing services to almost all the major law firms across the country. The competitive Rivalry in the industry is very strong. This is because the industry in terms of revenues is not growing much and is pretty much stagnant and the existing players are fighting fiercely for the market share. Our source of competitive advantage comes from the human capital that the company possesses and the company is striving to attract the best talent in the industry to compete effectively.

There are definitely options and opportunities for price discrimination which are not largely being used. However, some firms still use it in order to acquire some large client. These are,

  1. Discount pricing for large cases
  2. Multi market discount for national accounts.

In order to make more profits, I would advise adopting discount pricing for large cases. This would allow the company to get more business as the business would increase with not only the existing clients but more clients will be attracted due to the brand name of the company and the cost-effectiveness. However, speaking generally, the company should use markup approach where it can add its desired profit margin over the expenses for the particular job.

The current price that the company is charging is $55 per hour. The proposed price is to offer 10% discount in case of large cases. In that case, the price would decrease to $49.5.

It is expected that the implementing my proposal will increase sales by 10% in the first three months and the growth in sales due to the new cost policy will reach 20% in the first eighteen months after which the growth due to discount policy would remain almost constant at 5% annually.

The company can use the increased profit to further develop its human resource in first eighteen months. This is because reporting talent is already in short supply and increased sales would put severe pressure on existing resources of the company. It is very necessary for maintaining long-term growth. Otherwise, if the company fails to attract, develop and retain more reporting talent, it would fail to exploit any growth opportunities modifying its costing approach. It can also damage the image of the company.

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