Set Your Rates the Right Way

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If you’re a mental health provider, grad school taught you all about how to be a clinician. You learned to diagnose and treat the seemingly endless variety of ways in which we humans make a mess of our emotions and those of our loved ones. Then, you learned how to implement all that knowledge in a clinical setting through supervised therapy, learning from teachers, supervisors, and mentors, perfecting your ability to provide therapy. What you probably did not study nearly as much (if at all) is how to run your practice as a business. One aspect, the one that determines how much money your practice brings in, is setting your rates.

Therapists Are About Giving; Charging Money? Not So Much

No matter your degree, you chose to become a therapist because you care about people; you want to give, to help. I know this firsthand because my wife is a Marriage and Family Therapist, and that describes her to a “T.” One result is that when trying to figure out how much you should charge, you probably agonized over making it “fair,” fearing that if you charge too much nobody will come through your door and that even if some people do, many others won’t be able to afford it. That’s what happened when my wife first opened her private practice, she tried to intuit the “right” rate, looking at what other providers charged in our area. After working with a marketing coach, she more than doubled her rate. Guess what, people continued coming in through her practice door, and her take-home income increased dramatically!

The Problem with Setting Your Rates too Low

They say that familiarity breeds contempt. From my experience, this is why most of us have a tough time assessing the value of our own talents and knowledge. Your expertise and experience make therapy seem to you like water to a fish. You probably don’t realize any more how much you know about helping people – It’s all transparent to you! No wonder that you have a hard time charging premium rates for your services.

This reminds me of a story (true or not, doesn’t really matter) about Pablo Picasso. The famous artist is sketching in the park when a woman recognizes him and asks him to sketch her portrait. Studying her briefly, he creates her portrait with a single stroke of his pencil. The woman is ecstatic, “Amazing! You captured my essence with one stroke! Thank-you! How much do I owe you?” His reply, “Five thousand dollars.” The woman sputters in shock, “F-f-five thousand dollars?! It took you seconds to make this sketch! How could you ask for so much money?” “Madame,” responds the artist, “it took me my entire life to make this sketch!” The moral of the story is that similar to Picasso, you’re not simply selling the time spent with your client. You’re providing incredible value that’s only possible due to your many years of study and experience!

If you set your rates too low out of fear that clients won’t come, if you try to guess what they’re willing to pay, or if you charge what most of your colleagues charge, you set yourself and your clients up for a bad outcome. You may be forced to take on far more clients than you can serve at your best – some clinicians I know see 8, 10, or even 12 clients per day! If that describes you, then you know how burned out you get by the end of such a day. Can you honestly say that your last few clients on such a day experience the same attentive and empathic therapist that the first few clients saw that morning? If you set your rates too low and don’t make it up through sheer volume of clients, your income will suffer and you may be forced to shutter your practice, depriving your clients of your services altogether.

Set Your Rates like a Business Sets Prices

A while back, I surprised, not to say shocked, my web-hosting guy. I told him I want him to make a good profit on me. What? As a customer, I’m supposed to try to get the most goods and services out of businesses for the least amount of money, right? Why would I want him to make a profit on me? Simple. If he doesn’t make a good enough profit, he’ll go out of business, and I’ll have to find someone else. Someone who may not be anywhere near as good at what he does, or as responsive. You see, there are real costs, both monetary and other, to having to find a replacement who may not be as good. I’d rather pay more now than suffer those greater costs later.

How about your clients? You’re the person they trust to help them with their most intimate thoughts, feelings, and relationships. Don’t you think they want you to be able to afford to see only as many clients as you see at your best? Or do you think they’d rather save a few bucks and be your 10th client of the day, at which point you’re so drained that you have a hard time listening to them, let alone remembering the details of what they told you last session or the one before?

The bottom line is that you need to think like a business owner, because as a solo practitioner that is exactly what you are. You need to set your rates based on the income you need, your business costs, and how many sessions you can take on without burning out. My free worksheet helps you do exactly that.

But What About Those Clients Who Can’t Afford Higher Rates?

The answer is two-fold. First, you aren’t (and can’t be) the perfect fit for all clients. This applies not just to therapeutic rapport, but also to your rates. Some clients may be unable or unwilling to pay your rate, in which case they’re free to find another therapist who charges less (perhaps that therapist has lower costs, or doesn’t need as much income). In fact, you can offer to refer them if you know such a colleague. Second, setting your rates higher doesn’t mean you can’t reduce your rates on occasion. For example, it would be perfectly reasonable to accept a request from a current client who suffers a major financial challenge and asks for a temporary reduction so he or she can keep seeing you. I’d just recommend that you specify how long the reduction applies, whether in weeks or number of sessions, after which you can reassess.

What’s your experience with setting rates? What do you think about this post and/or my free worksheet? Please leave your feedback below. I promise to respond to all (relevant  ) comments and questions.

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Comments (8)

  • A
    • 2017-05-27 01:21:32

    Thank you! This was very helpful. And it confirmed what I knew to be true, I need to charge more. Looking forward to hearing more about your course.

  • A
    • 2017-06-08 05:35:47

    Thanks for the info. I'm in the field of Rehabilitation Counseling and we receive almost nothing about business practices. Now that I'm close to heading out on my own to work with people who acquire illness or disability, I can't get enough about how to make smart business decisions! PS. I found this through the Selling the Couch podcast.

  • L
    • 2018-02-24 19:17:14

    Great worksheet! I'd suggest adding a line for retirement savings and health insurance. We have to take care of our future selves!

  • O
    • 2018-02-25 20:14:48

    Thanks Liz. Those were some of the items on which I went back and forth. In the end I decided to treat those as non-business expenses, which are covered by the amount you want/need to make (line 1 in the worksheet). Otherwise, I'd have needed to include such things as taxes, rent/mortgage for your house, etc. Those are also affected by such questions as how much your spouse (if any) makes, your local and state tax brackets, etc. That would have made the worksheet even more intimidating than it already may appear to many, so I opted to minimize to actual business expenses. Once I release my course, I will address these sorts of elements, because I'll provide support to students who struggle with them. I also help my one-on-one coaching clients with such things, again, because I can help them get past any difficulties they may face when addressing personal finance questions.

  • T
    • 2018-03-05 15:35:17

    I agree. How do you find a Marketing Coach? I've set my rates based on this type of calculation but as a therapist who relocated 6 months ago to a new city where I don't have connections, my practice isn't full yet. Local therapists have told me they won't refer to me because I don't take insurance (though I did take it for 9 years which is why I'm no longer taking it). I have a niche specialty and the folks who fit that niche often are underemployed or struggling financially.

  • O
    • 2018-03-05 16:07:37

    Tavi, your situation is certainly not simple. If you give me some more details of the niche you serve, I may be able to offer more specific suggestions. Meanwhile, here are a few things I'd suggest. 1. Network with therapists in private practice who don't take insurance (there are quite a few). They won't judge you for making that choice, and their clients will by definition be ones who won't see your accepting insurance as a critical factor in seeing you. Even though you're new in your current location, I'm sure you can research colleagues in your area and see which ones don't work with insurance directly. 2. Consider if there are areas within your niche, or a niche that's related to the one you serve, where you could find clients to serve who can afford the rates you need to charge to have a viable practice. 3. Find ways to reduce your costs in order to let you charge lower rates without sacrificing your practice's profitability/viability. Regarding coaching, I'm currently offering a free 20-minute coaching call. If that's something you'd be interested in, send me an email (

  • B
    • 2018-07-29 03:25:12

    Hi. I have a couple of questions. The first is how to adapt your worksheet for those of us who own or are starting a group practice (so there are other expenses and income streams beyond our own pt contact hours). The other question is how to maintain high enough fees while also offering low fee slots since providing services that are affordable to people who are not Upper middle class is part of the mission of my group. Thanks for your help!

  • O
    • 2018-07-29 21:55:34

    Hi Beth, Thanks for your questions. I'll do my best to answer those here, but the topic gets complicated, so it's easier to address over the phone. Feel free to drop me a line via the contact form with your phone number if you'd like me to call. Regarding the group practice situation, you should split up your costs into three categories: (1) fixed costs that don't depend on how many sessions you or your associates do, (2) variable costs for your sessions, and (3) variable costs for your associates' sessions. You have to make sure that whatever you charge for your associates' sessions is high enough that it covers category 3 (including the salary or session fee you pay the associate) and a prorated part of category 1. For your own sessions, you have to charge enough that it covers category 2 costs plus the remainder of category 1 costs. Because the prorating depends strongly on how many sessions you do and how many your associates do, you most likely will need to make sure your associates do a lot of sessions, to reduce the "cost stress" of category 1 costs. To respond to your other question, I suggest to my coaching clients that they should decide on a number of pro-bono or deeply discounted sessions they're willing to do each week. Then, they have to recalculate a bit higher the fee for clients paying in full, because they can't do as many of those full-pay sessions. I hope that helps, but as I mentioned above, leave me a message with your contact info via my contact form and I'll be happy to do a free 20 minute phone consult for you to explain more, or address whatever other issue you find most vexing and challenging (from a business perspective since I'm not a therapist :)).

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