Setting Fees

Setting Fees and Knowing What To Charge

At the heart of the business and financial side of private practice is having clients that pay us for the services we provide. And the truth of the matter is that people DO want to pay us for what we do. In return, we give them our time and expertise into helping them make the changes they want to make in their lives.

As we saw in the previous section, what we charge clients for sessions has huge impact on our bottom line.  And in reality it's pretty simple math. Charge clients the most you can for the session and then have enough clients each week to reach our financial goals.  So how do you know what to charge for a session?

Working Backwards

Again, in the previous section we discussed working backwards to come up with a plan to reach the salary we want to pay ourselves.  The same formula can be used to come up with a figure to know what to charge for a session. You simply substitute the number of sessions per week for the session rate.

Using the previous example, assuming a salary of $50,000.00 per year.

Divide $50K by 12 = $4166.66 a month needed.  This is what you would need to pay yourself each month after expenses and taxes.  Assuming you want to take 4 weeks off for vacation, divide $50K by 48 weeks = $1041.66 weekly pay after expenses and taxes.

Next, let’s translate this into what to charge and sessions needed per week. (Again, figures are going to vary according to your expenses)

Ideal Salary - $1041.66 weekly

Practice Expenses - $500.00 weekly

Taxes - $187.50 (assuming 18% self-employment taxes)

Subtotal - $1729.16  gross income needed per week

Rate to charge based on the number of sessions you want to have in one week. (Divide $1729.16 by the number of sessions):

Number of Sessions - Rate

30 - $58.00

20 - $87.00

10 - $173.00

Obviously, the more you charge, the fewer sessions you need to have in order to reach a targeted goal.

Average Session Rates

The reality of being in practice, especially if you are on insurance panels, is that your per session rate can vary.  If you are strictly cash/self-pay in your practice, in other words do not accept insurance, it is less variable. In either case, knowing your average per session rate is an important to figure out.

The other thing too, you have to take into consideration is the effect of no shows or when you do not get paid for sessions.  Again all of this needs to be taken into consideration. But by knowing your average session rate, it helps in figuring the number of sessions you need to target having in order to meet financial goals.

Again, it's a simple formula:

Total revenue for period ÷ Total number of sessions = Session rate average

Again, having a higher per session rate average is something to shoot for.

Insurance Rates

For those clinicians that are accepting insurance and depending on the area of the country you are located, your per session rate is somewhat dictated by the insurance company.  If you are in-network with an insurance provider, the per session rate is based on the contracted rate for a specific CPT code(service codes you put on insurance claims). And this will vary from one insurance company to another.

When possible, do try and negotiate a higher rate when the contracts are made or renewed.  And if you are providing a specialty service (like EMDR or some other certification) you might have more room to negotiate this with the insurance company.  Also if they are needing providers for your area, you might have more negotiation room.

Increasing Your Averages With Self-Pay

In theory, you can charge as much as you want for your sessions.  If you think you can get $500 per session, got for it! The reality is that you need to charge a fair rate and also one that the market can bare.  The other thing, to maybe consider, is being within the same price range as other therapists for your area.  Again, it's what the market with bare.

A strategy here is to Google other therapists in your area and look at their websites.  They very likely will have their session rates posted. For example, Psychology Today profiles usually have session rates posted. Set a rate for yourself that is on the higher end of the average for your area

Your Standard Fee

One of the things you will want to do as part of your overall financial plan is to establish your “standard rate”.  In other words, the rate you publish on your website and other places. This standard rate needs to be high, but realistic.

Tip: Do NOT fall into the false logic of setting your rates low thinking that people will select a therapist based on price! It’s a poor marketing strategy. And, if people are picking you as their therapist because you are the cheapest, are those really the kind of clients you want? Think about it..

If you are insurance based and on insurance panels, this is also the rate you will put on your claims... That’s right, even if your contracted rate is much lower ALWAYS put your standard rate on the insurance claim!

The reason why is that the insurance company is only going to pay you your contracted rate and will reflect that EOBs and ERA’s (insurance lingo…).  But what you don’t want to do is cut yourself out of any pay increases or if it turns out the policy does not pay for mental health, you want to get the maximum you can. It also gives you room for negotiation when your contracts need to be renewed.

The other reason to put your full standard rate is when you have out-of-network charges.  Again, the insurance company is only going to pay their out-of-network rate. You want to get the maximum you can from that. Charge your full rate!

Sliding Scales and Discounted Pricing

One of the things we want to always do as a caring profession is to have some provision for clients that are unable to pay our full rate or do not have insurance. And there are times when we need to take pro bono clients.  It’s the right thing to do…

One way to do this is to offer a sliding scale payment option. Sliding scales are generally based on a client’s income level. In other words, their income level determines what they pay. But if you do this, the ethical thing to do is offer it to everyone. If not, don’t offer it at all.

Sliding scales can be a way to help increase your average per session rate if it is set to the correct ranges.  Again, do not undermine yourself.

A good strategy is to keep a sliding scale fee schedule to a minimum of 3 categories.  It is also a good idea to do some research and find out about average income levels for your area and base it somewhat on those numbers.

Keep Your Lower Range At Average

So the key to having a sliding scale is to keep your lower range in line with your average per session rate. Here’s an example:

Let’s say you are accepting insurance and your average per session rate is $80.  Your full standard rate is $150 per session. A reasonable sliding scale could be:

Income - Rate

Annual family income is $20,000 or less - $80.00

Annual income $20,000 to $50,000 - $120.00

Over $50,000 - $150.00

As you can see with this example that you are protecting your average per session rate by keeping the minimum no lower than your average.

Being Flexible

Of course there is no precedent to having a sliding scale or that you have to be hard and fast about sticking to any sort of pricing structure. The thing you have to always take into consideration is doing what is best for the client. As was mentioned, there will always be those clients we should take pro bono. It’s just the right thing to do.  And there will be clients that we can offer a greatly reduced fee because we know they are committed to doing therapy and also unable to pay the full fee. So always give yourself room to be flexible.

Changing Your Rates

It's a good idea to evaluate your rates periodically.  And it is reasonable to increase your rates on a regular basis to keep up with inflation. Again, there is no set way of doing this, but raising your rates based on a percentage each year makes sense. The standard rate of inflation for the past several years is about 2% each year.

You do want to communicate your rate changes to your current clients ahead of time.  Or another option is to simply keep their rate at the same rate they started with, then use the new rates with new clients. But you do want to consider the ethics of this and making sure you don’t have too much variation among clients.

Another strategy you can adopt is that as your practice gets full, in other words, the demand for your services is high, that is the time to go up on your rates.  The whole idea of supply and demand. Again, its what the market will bare.


Your session rates are one of the main pieces of the financial side of private practice. You do want to price your services high enough to make it profitable for you.  It’s important to find “the sweet spot” of charging as much as you can, and at the same time, a rate that is inline with your market and what people are willing to pay. The other piece to this is not to undermine yourself by charging too little.

Ultimately, you can charge what you want to, but do make the decision based on some clear data and some market research. The other part of this is keeping it ethical and fair for your clients.

Money Matters- Setting Fees.pdf
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