July 30, 2021
As a financial therapist who offers coaching for private practice therapists, hands down, the most frequently asked question I get is, "what should I charge?" In this post, clinicians will learn why the three most common "methods" of setting a fee are mistakes, how to set a sustainable fee, and tips on overcoming money mindset blocks.
Looking to other therapists' fees and setting a price based on their fee. This method is the one I chose when I first started as a therapist in private practice. I spent a weekend googling other therapists' rates in my area and compiled a list of how much they charged, how long they'd been in practice, and what their credentials were to try and find a pattern to their fee. I picked a fee 10% lower than the median number (I am a spreadsheet nerd, after all). I priced my therapy services this way as a way to signal to potential clients, "I'm not the most expensive, but I'm not the cheapest, either." (Talk about money mindset blocks!) This method is a mistake because it's based on other therapists' (likely) arbitrary fees.
Based on what insurance providers reimburse. I see some mental health clinicians in private practice use the rate that insurance providers use to set their fees. This method is a mistake because those fees go up--and down--each year. Insurance providers' reimbursement rates are notoriously difficult to find unless a person is on their insurance panel. This method means clinicians are fee-setting by hearsay based on what they can find poking around online or through the grapevine.
Raising rates slowly and over time. This fee-setting method is the one I see lots of therapy coaches using. This method means that to get to a therapist's ideal full fee in a year, they raise their prices quarterly for new clients but grandfather in old clients at their current rate. Let's say a clinician's full fee is $200. In January, they charge $100 for new clients, in March $125 for new clients, in June $150 for new clients, in September $175 for new clients, and then finally in December $200 for new clients. Confused? Just imagine being a therapy client on the receiving end of that! In addition to being a confusing method from a client and therapist standpoint, a hiccup I see many clinicians run into is a mindset barrier. They plan to raise their fee in three months, but they talk themself out of it and end up waiting six months, a year, or not at all.
Why These Are Fee Setting Mistakes
The problem with all three of these methods is they take an external, non-strategy-based approach with no individualized look to creating a fee. I doubt a therapist would tell a client to do any random coping strategy without considering their unique needs, so why do so many therapists do it in their private practices?
How To Set Private Practice Fees
Setting private practice fees as a social worker, therapist, psychologist, or other mental health worker means looking at what the specific clinician needs to earn to thrive. I teach my clients to look at what is sustainable, aligned, and values-based for them. That means making sure a therapist's fee can cover the following things.
Here are questions I ask all of my private practice coaching clients as they get ready to set their fee:
Can my fee allow me to:
If the answer is "no" to any of these questions, it's time to create a new fee. First, I encourage therapists to sit down and answer the above questions with numbers. How much does it cost to pay personal and business bills? To afford quarterly taxes? How much is a good healthcare plan? What money needs to be set aside to pay for self-care and professional development? I encourage adding up all of those expenses.
From there, it becomes a simple math problem:
Cost of thriving multiplied by 1.25 divided by the number of clients a therapist can sustainably see.
* This quick 1.25 multiplication can help you ensure your fee can cover your taxes. Check with Heard or your accountant to find a number that suits your situation.
Cost of thriving: $125,000
Multiply by 1.25: $156,250
Divide by the number of clients (here, I use a number 18x48 18 clients/week for 48 weeks to account for time off): $156,250/864 = $180/session
Overcoming Money Mindset Blocks
Clinicians have to wrestle with a unique set of money mindset blocks to raise their fee. While these money mindset blocks vary, at the root of most of them is "I feel guilty charging more because as a therapist I'm supposed to be a highly qualified volunteer." One of my favorite ways to help therapists think about increasing their fee to support themselves is to include financial self-care in your self-care. Try, "Saying no to an unsustainable fee allows me to protect my peace," or "Having a fee that supports me allows me to be fully present and resourced for my clients."
The Sustainable Way to Set Your Hourly Therapy Fee
There you have it, therapist friend! A better way to set your hourly counseling or therapist fee in private practice, based on what you need to thrive financially and emotionally. If you want help developing your fee in a way that supports your financial goals, Heard can help! With dedicated finance expert support, Heard can help you see how much you need to charge to meet your practice's financial needs.
A version of this piece is shared on Lindsay’s blog, Mind Money Balance.
Lindsay Bryan-Podvin, LMSW is a biracial financial therapist, speaker, podcaster, and author of the book "The Financial Anxiety Solution." In her Michigan therapy practice, Mind Money Balance, she uses shame-free financial therapy to help people get their minds and money in balance. She's expanded her services to help therapists with their money mindset, niching, and authentic marketing so they can include financial self-care in their self-care practices. Lindsay can be found at her website or on Instagram @MindMoneyBalance.