How Much Should I Charge in My Therapy Private Practice?
As a private practice therapist, you're probably used to getting paid after delivering your services. Whether it's a W2 job or working for yourself, you know that managing private practice finances can be tricky sometimes. But how much should you charge for private practice therapy?
Many factors go into this decision, and no one size fits all answer. One of my first pieces of advice for private practice startup is to run your budget (both business & personal) through a private practice income calculator, which will help you make sure you're covering all business expenses plus your own financial needs.
While I’ve created a handy, no-frills private practice budget template that will automatically calculate a suggested private pay fee for your practice, there are a few things you’ll need to keep in mind as you’re figuring out your fee. I’ve highlighted a few of the main points below:
Figure Out Your Gross Annual Operating Costs
To figure out how to set private practice fees, you first need to consider all the costs associated with running a business. These costs include rent, salaries, utilities, savings, insurance, and taxes.
How do you calculate this figure? Add all the total annual operating costs of running the business. After determining the gross annual operating cost, you can use this information to determine how much you need to charge for services and how many clients you will have each week.
Calculate the Number of Hours You Want to Work Each Year
Determining the ideal number of client hours (aka billable hours) you’d like to work each year, as well as the number of weeks per year you’d like to work, is an essential part of figuring out how much to charge per session.
As a private practice therapist, you should be realistic when calculating the number of hours you want to work each year. By realistic, I mean consider the following when setting an ideal maximum number of client sessions per week:
How long does it take to complete documentation after sessions, and can you build that time into the day (or at the end of the day) without overloading yourself with sessions?
How much time do you need to dedicate to non-clinical work, such as emails, phone calls, documentation, networking, training, marketing, etc.? A lot of folks are eager to fill every open spot on their calendar with client sessions, while forgetting that non-billable tasks take up time, too—and they’re just as important as the work you’re doing with clients.
Are you working with client populations that are heavy in trauma, crisis, or other acute concerns? Having a larger percentage of higher-acuity clients may mean seeing fewer clients per week, to allow yourself time to re-calibrate and recuperate.
How much time do you realistically need away from the office—and I mean, really, truly away from the office & client work—for vacation, self care, and your own mental health days? These are also just as vital as time spent in session with clients, and your budget and fees should be able to support your time away from the office.
Please please: refrain from overworking yourself; I typically encourage my private practice coaching clients to take on a maximum of 20 clients per week and a minimum of 6 weeks of PTO a year. While your numbers will depend entirely on you, it’s important to remember that therapeutic work is emotionally, mentally, and often physically taxing—seeing fewer clients and taking time away from the office on a regular basis is an essential part of
Do the Calculation To Get How Much Fee To Charge
After you have figured out how much your gross annual operating costs are—including your rent, insurance, taxes, savings, and salaries—take this gross annual operating cost and divide it by your expected annualized client hours. The amount you will get after the calculation will be your therapy private practice fee.
For example, if you use 100k per year as your operating cost and the ideal number of client hours is 598, your suggested fee will be approximately $165 per session. With your therapy private practice fee well established, you should remember to plan for rate changes each year. Your rates may increase or decrease depending on the country's standard of living during that year.
It will help you to match the increasing cost of living (inflation) and increase your experience, training, and specialty in your area of expertise. Increasing your rate also may help you expand your business to accommodate a huge clientele, increasing your returns.
Final Thoughts
If you're getting started in private practice therapy, it is important to know how much to charge. But there are still a few things to consider. First, how much do therapists make? Second, what type of hours will be ideal for you? And third—and perhaps most importantly—how much do you want to make each year in private therapy practice?
I know that figuring out all the ins and outs of private practice can be tricky. But you should know: Once all the numbers are crunched, and your ideal rate is established, you'll know exactly how much you need to charge to lead a comfortable, well-resourced life as a private practice therapist.
I also know that putting all of this into place can feel tricky, scary, or even emotional, especially for newer therapists and those who are used to sliding their scale or taking insurance. If you’re struggling to implement your new private practice fee that you figured out using my self-pay fee calculator, reach out for a free 30-minute consultation to see if business coaching for therapists might help you take those scary steps toward having the private practice of your dreams.