Setting Private Practice Fees That Fit Both You and Your Clients

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When setting private practice fees, you want to make sure that the rates you choose are high enough to reflect the value you provide and will be able to help you reach your financial goals. But you also want to ensure you don’t price out your client base by making them too high. Keep reading to learn the magic formula for how to set private practice fees that keep your clients happy and help you reach your goals.

Consider Key Data Points When Determining Rates

There are several pieces of information to think about when choosing your rate. These data points can help you determine the minimum you need to charge and give you a rough idea of a ballpark figure to aim for.

  • Operating Costs – Calculate all your expenses related to running your private practice. This includes rent, utilities, insurance, office supplies, marketing expenses, professional association fees, and any other overhead costs. Knowing your operating costs will help ensure that your fees cover these expenses and contribute to the sustainability of your practice.
  • Available Hours for Seeing Clients – Next, you need to know how many hours you have available for seeing clients. Don’t forget to factor in time for things like administrative tasks, case notes, professional development, and personal time. It’s a good idea to allocate some time each month for sick days or any other unforeseen circumstances too.
  • Local Market Rate – Knowing what other comparable professionals are charging for their sessions means that you have another rough figure to work from. Research the rates charged by other private practitioners in your local area who offer similar services. Ensure that you look at people with similar experience and expertise in your field who serve a similar client base.
  • Insurance Reimbursement – Some private therapists accept insurance, while others see clients only on a self-pay basis. If you decide to work with insurance, understanding the reimbursement rates will help you factor them into your fee structure. You should also be mindful of the administrative requirements and potential delays associated with insurance billing. 

The Magic Formula for Calculating Therapy Rates

While there is no magic formula for calculating your rates, there are many ways to arrive at the best rate for both you and your clients. This section looks at the key elements you need to consider when setting suitable rates for you and your business.

  • Set Your End Financial Goal – Determine what you want to earn each year. Consider your personal financial needs, business expenses, savings, and any other financial objectives you have. This will provide a baseline for calculating your rates.
  • Determine Your Optimal Schedule – How many days a week do you want to work, and how much vacation time do you want to be able to schedule? Do you need to work around family commitments that limit your time to certain hours?  By structuring your schedule in a way that works best for you, you can understand a realistic number of clients to see each week and adjust your rates accordingly.
  • Build in a MarginYou should also include a built-in margin for unforeseen expenses that may arise. The margin can also counteract any client cancellations by ensuring that the loss of income does not impact you too much. Building in a margin ensures that you have room to cover unexpected costs and helps maintain the financial stability of your practice.
  • Determine Your Ideal Number of Sessions Per Week – Calculate the number of clients you can realistically accommodate in your practice based on your available hours, desired workload, and the quality of care you aim to provide. Consider factors like how long each session runs and how much preparation and administrative time you need for each.

Now we’ll bring this all together in a table with options so you can see how the session fee formula works and how small changes can make a big impact on required session fees.

Therapy Session Calculator

Preferred Schedule
& Salary
Larger SalaryMore Session
Per Week
More Session
& Larger Salary
Monthly Operating Expenses$2,000$2,000$2,000$2,000
Annual Costs of
Unexpected Bills
Desired Gross Salary$80,000$100,000$80,000$100,000
Total Annual Costs for
Expenses and Salary
Total Weeks Per Year52525252
Vacation Time in Weeks2222
Holiday and Sick Time
in Weeks
Workable Weeks Per Year48484848
Preferred Therapy
Sessions Per Week
Margin for No Shows
and Cancellations
Billable Sessions Per Week17172626
Annual Sessions Based
on Available Weeks
Minimum Session Fee$130$154$87$103

Common Mistakes to Avoid

Knowing the common mistakes people make when setting private practice rates means you can effectively dodge them. Avoiding these mistakes will help you set more accurate rates that reflect your financial needs and the realities of running a private practice while keeping your rates at a level that clients are happy to pay.

  • Ability To Pay Taxes – Many people forget you must set aside a portion of all of your income for taxes. Consult with a qualified accountant to fully understand your tax obligations, and then you can decide the best rate structure that allows you to cover your tax liability while still meeting your financial goals.
  • Not Accounting for Time Off – When you work out your ideal annual income, you may be tempted to divide it by 52 weeks of the year. However, you need to remember that you want vacation time. How many weeks do you want to factor in? It’s entirely up to you, but you must remember to factor in vacations, national holidays, personal or sick days, and any other time you plan to be away from your practice.
  • Not Accounting for No Shows and Cancellations – No-shows and cancellations can impact your revenue and disrupt your schedule. When determining rates, it’s wise to account for these potential losses by factoring them into your fee structure. You can consider implementing a cancellation policy that includes fees for missed sessions or establishing a system to fill last-minute cancellations to minimize the impact on your income.
  • Forgetting Your Ideal Income – Another thing that you must make sure you do is remember your ideal income. While it may be important to remain competitive, that won’t do you good if you can’t make enough to reach your goals. Remember not to base your rates solely on external factors like market rates or competition. Consider your financial goals as well as the value you provide to clients. Setting rates that align with your ideal income ensures you can sustain your practice and meet your financial needs.

Consider Different Fee Structures Options

Now you’ve decided how much you need to charge to reach your financial goals and stay competitive with other therapists in the area. It’s time to look at ensuring that your fees also meet your clients’ needs.

Everyone is different and many people who need your services may not be able to afford them. Therefore, you could consider implementing some of the following strategies.

  • Offer Sliding Scale Fees – Creating a sliding scale fee structure allows you to offer reduced rates to clients who may have limited financial resources. Determine a range of fees based on income levels or other factors, such as household size or financial hardship. This approach ensures that clients with varying financial circumstances can access your services without facing significant barriers.
  • Offer Package Deals – Offering discounted rates for packages of sessions of therapy can incentivize clients to commit to longer-term treatment. Providing a reduced rate for a set number of sessions creates value for clients and encourages their commitment to the therapeutic process. This approach benefits both parties, as clients receive a lower overall cost while you secure a stable client base.
  • Offer Payment Plans – It’s important to recognize that some clients may struggle with paying the full amount of your fee upfront. To mitigate this, you could consider offering alternative payment options, such as payment plans or flexible payment schedules. These options allow clients to spread out the cost of therapy over time, making it more manageable for them. Collaborate with clients to find a payment arrangement that aligns with their finances.

Communicate Fees Effectively to Clients

Now that you’ve set the rates, you need to take steps to ensure that these are communicated effectively to your clients. This communication means they are more likely to pay them on time, and upfront transparency can help reduce dissatisfaction with the fees.

  • Intake Process – Clearly explaining fees and payment options during the intake process means that clients are fully aware from the onset of what they will need to pay and can raise any concerns or questions they may have. Making sure your clients have no surprises when it comes to paying their bills reduces the likelihood of you having to deal with non-payment.
  • Policies and Fee Agreements – Providing written fee agreements and policies for clients to review and sign can formalize the fee structure and ensure clarity and understanding. This should include any late payment fees, any fees for missed sessions, and your payment details. Request that clients review and sign this agreement, confirming their understanding and acceptance of the fees and policies.
  • Quickly Answer Questions and Concerns – Addressing clients’ questions or concerns about fees and payment options is important to build trust. They may be unsure if you accept their insurance or worry about being able to afford your rates. Create a welcoming and non-judgmental environment where clients feel comfortable discussing finances. Collaborate with clients to find a solution that works for both parties.

Evaluate and Adjust Fees Over Time

Once you’ve set your rates, there’s nothing to prevent you from making changes to them. In fact, it’s an excellent idea or review and adjust your rates periodically to ensure they are still suitable for your practice.

  • Review Your Rates Regularly – Regularly reviewing and evaluating fee structures based on client feedback and business goals is crucial to ensure that both you and your clients remain happy with the fees. You should also review your fees when you complete additional training or gain knowledge in a new area of expertise.
  • Adjust Fee Schedule When NeededAdjust fees as needed to remain competitive and aligned with the market. To do this, you should keep track of the fees your competitors are charging.  If your fees are significantly lower or higher than other rates in your area, consider adjusting them to ensure your prices remain competitive. However, remember that fees should also reflect the value and expertise you provide clients.

Build Client Loyalty With Transparency

When you’re upfront and transparent about your pricing, you create an environment of trust and open communication between you and your clients. This then establishes a foundation of trust that can lead to long-term relationships.

  • Explain the Benefits – Explain the value and benefits of therapy services to clients to help them understand the importance of investing in their mental health. Educate them on how therapy can improve their well-being, enhance their relationships, and support personal growth. By highlighting the transformative power of therapy, clients can better appreciate the value they receive and be more willing to invest in their mental health.
  • Build Trust – Being transparent and upfront about fees and pricing policies to build trust and client loyalty is crucial to retaining clients. Being open, honest, and clear about your fees and pricing policies demonstrates your commitment to ethical practices and client-centered care.
  • Communicate – Always give clients plenty of notice when you raise your fees so that they have enough time to adjust to the change. Provide comprehensive information about your rates, session lengths, package options, and any additional costs involved. Be upfront about payment methods, cancellation policies, and insurance coverage. 
  • Offer Loyalty Rewards – Offering discounts or loyalty programs to reward clients for their ongoing commitment to therapy services is a good way to demonstrate your appreciation for their continued business. You could offer discounted rates for a certain number of sessions, as suggested above, reduced fees for long-term clients, or referral incentives. These programs acknowledge and appreciate clients’ loyalty, reinforcing their commitment to therapy and encouraging them to continue engaging with your practice.

Alternative Ways to Help Clients

Some people won’t be able to afford your services, and you shouldn’t have to lower them across the board just for those people. However, there are some ways that you can help them while keeping your standard rates at a level that you’re comfortable with.

  • Pro Bono – Pro bono work allows you to contribute to your community and offer support to individuals who may otherwise be unable to access therapy. Allocate a portion of your practice hours to provide pro bono services to clients who cannot afford your regular fees. Just remember to be mindful of how many hours you offer and put things in place to avoid system abuse.
  • Referring Client Out – If you’ve run out of capacity for offering pro bono sessions, you could try to refer clients to low-cost or free community mental health resources. Collaborating with other mental health professionals and maintaining a referral network can expand the support you can offer to clients with financial constraints.
  • Alternative Sessions – You can provide a cost-effective alternative to individual therapy by offering group therapy sessions or workshops. Treating multiple clients simultaneously means lowering overheads and passing those savings on to your clients.
  • Online Therapy Services – Offering online therapy sessions means that you may be able to practice with fewer overheads. Ensure that you’re licensed in every state where you intend to practice and use HIPAA-compliant software to facilitate the sessions


While there is no magic formula that guarantees complete satisfaction for private practitioners and clients when setting fees, there are many things you should consider. By following the tips above and using a strategic approach to setting your fees, you can find a fee structure that balances your financial obligations and goals with the happiness and accessibility of your clients.

There is no one-size-fits-all approach, but by carefully considering these factors, continuously evaluating fees, and adapting as needed, you can strike the perfect balance between your financial well-being and providing accessible and valuable services to your clients.

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