If you’re like most therapists in private practice, I can almost guarantee that you’re making this simple mental mistake that’s costing you thousands of dollars every year. If your practice is full, that may even be tens of thousands of dollars. What’s worse, beyond the simple loss of income, it’s forcing you to see too many clients, making it harder to keep bringing your best self to the chair.
I’m not a therapist, but when I started my consulting practice, I made a similar mistake. At the time I was in academia and, as you’ll recall from your own grad school experience, they don’t teach us how to be effective business owners (most faculty members wouldn’t even know how to be one themselves). But more about my experience later.
The Mistake Almost All Therapists in Private Practice Make
When you set your rates, you probably have a mental conversation with your clients, where your mind plays both your part and theirs. Now, because your mind is handling both sides of the conversation, the two sides completely understand each other.
The “you” side asks, “How much do you think it makes sense for me to charge you for my time? ”
The “client” side answers “Not too much, or I won’t be able to afford therapy.”
“Ok,” the “you” side answers, “how about $110 per session? ” (or plug in whatever rate you decided you could charge).
“That’s ok, I guess,” answers the “client” side. Then, your mind added whatever rational explanation you needed to justify that decision.
Guess what? That thing that happened in your mind, that wasn’t a real conversation. If you were to talk with a real client, and if she was sufficiently self-aware, she’d tell you that she has zero interest in paying for your time. Say what?! Yup, you heard me. Your client does not want to pay anything for your time. Nothing. Nada. Zero.
The Real Conversation About Your Rates
“What the heck are you talking about Opher? ” (if you’ll forgive me for putting words in your virtual mouth – see, my mind can hold a conversation with itself too :), but bear with me). You may think your client wants your time, but what she really wants, what she’s really willing to pay for, is your help with solving her problem, dealing with her pain. That’s why she’ll write that check or hand over her credit card at the end of your session.
If you were having that real conversation with the self-aware client, and you told her you thought the two of you were talking about her paying for your time, she might have an expression on her face reminiscent of our friend the Adelie penguin above ;).
So why did your mind insist that the rates conversation was about your time? Simple, because that’s the only resource you spend during the session. Your expertise doesn’t decrease as you do therapy, quite the opposite! It’s your time that goes away and will never come back. And if you’re like most therapists in private practice, you think that your client is thinking about the same thing you’re thinking about – your time.
So, what if you asked your client in real life, “What would you be willing to pay to have the pain go away? ” Or, if you’re a Marriage and Family Therapist like my wife, “What would you be willing to pay to save your marriage (and avoid the pain of a divorce along with the devastating costs it entails, financial and emotional)? ”
Do you still think your client would say something like “Not too much, or I won’t be able to afford therapy ”? Or do you think she might be more likely to say something like, “Whatever you need to charge, just for heavens’ sakes make sure you bring your A-game to our sessions ”?
You see, the real conversation your client is interested in is not what you charge for your time. In fact, if you charge too little, she may conclude that you must not be very good or you’d charge a heck of a lot more. The only question that matters to your client (unless she’s truly unable to pay for private-pay therapy, in which case you should refer her to a good low-cost or no-cost alternative like the Pro-Bono Counseling Project that I mentioned before), is this – can you solve her problem and make the pain go away?
When I First Set My Rates
More than a decade ago I started consulting on the side. My hourly rate as a university employee at the time was an underwhelming $35, and that’s counting benefits. When I managed to create an opportunity for something extra on the side, I had to decide what to charge.
In retrospect, I’m sure I had a similar internal dialog in my head, with my mind running both my side and that of my client. My mind asked what he’d be willing to pay for my time, and my mind’s version of him said he’d be willing to pay about double my hourly rate as an employee, so I decided to ask for $80/hour.
When I had a real-life conversation, my actual client agreed. However, since the problem I was able to solve for him (that he didn’t have more than 24 hours in his day, so adding my expertise and time to his allowed him to get paid much more by his client) was probably worth about double that for him, I suspect he’d have been willing to pay $120/hour, and this is for someone who wasn’t coming to me to save his marriage or his sanity! By the way, in today’s dollars, that would have been $160/hour.
Today, I’m paid $350/hour by clients who are thrilled to pay that, because they know that paying for a few hours of my time can help with their pain point, growing their bottom line by thousands or tens of thousands of dollars a year.
When My Wife Started Charging for the Difference She Makes
As I said many times, I’m not a therapist, but my wife is. When she started out in private practice, she went through her own version of the above internal dialogue and came up with what she thought clients would pay for her time.
It was only after some serious coaching that she upped her rate by more than 50%(!) to something that better reflects the difference she makes for her clients. This allows her to see fewer clients, meaning she can be her best self when she sees them. It also means her revenue is higher by tens of thousands of dollars a year than it would be otherwise.
When Will You Start Charging for the Difference You Make Rather than for Your Time?
If you haven’t done so yet, grab a copy of my free rate-setting worksheet and figure out what your rate needs to be to cover all your expenses and make the income you want to make from the number of sessions you want to work. The result you get from the worksheet is not the final word. Rather, it’s the minimum you need to charge.
Then, think about the difference you can make for your clients if you’re not burned out, if you’re free to be your best therapist self for each and every one of them. What do you think that’s worth for your clients? That’s the internal conversation you should have so you can set your rates the right way. Because if you don’t believe your clients should be happy to pay what you decide to charge, either you won’t do it, or if you do, you’ll feel apologetic about it, which is even worse. Your prospective clients will sense it and will want no part of working with you
If you want some coaching support to help you through the emotional baggage implicit in that false internal conversation with your mind's version of your client as well as the financial calculations, I'd be honored to work with you. Just drop me a line and we'll do a free phone consult to figure out if we'd be a good fit.