This is a good journal exercise to use for planning your fees and rates. We will go through this together, exploring different factors and then using a simple equation that can help us determine our hourly fee. Have a pen and paper ready!
What would your ideal therapy practice look like?
Each therapist is unique – We will each have our own ideas and inspirations of what it means to be a therapist in private practice. Whether you are starting out or an experienced therapist, I always feel that it is beneficial to explore different areas of our private practice and see what we might need to change or explore more of. This includes the rates we charge to our clients.
Some factors to think about – Get a pen and paper and write down what comes up for you…
Who are the clients you would love to work with? This is an important factor to take into account when we start to think about how to build your business and much you will charge.
Your location and are you are working online or in-person?
The world of teletherapy has really boomed since the pandemic. Many therapists have now seen and experienced the possibility of running g their own private practice at home, which has many benefits in terms of cost and flexibility. Can you see your Self running an online therapy business?
Not everyone enjoys the online experience. While there are many benefits to having an online therapy practice, there are also many benefits of seeing clients in-person. I enjoy doing both but I often find that in-person sessions often do feel more personal with a fuller experience of the senses Vs when I am doing an online session, it tends to be more methodical and logical. This is just my experience – And each therapist will feel which option is best for them and how they work. Which do you prefer and why?
Your location also matters when you are deciding to do in-person therapy sessions – This will affect your costs (transport, therapy room fees etc) and how much you can charge your clients. So, if you are thinking of offering mainly in-person therapy sessions, how much does the average therapist charge in your area of work? How much does it cost to rent your own therapy office or book hourly/ad-hoc or block hours in a therapy clinic in your area? This is a great time to start researching and get some figures to reflect on.
There is always the option to do both! This is what I have chosen as each client will also have their own preference. Sometimes clients start off by doing in-person sessions and then move online. Some therapists I speak to always prefer to do their initial consultations online and then offer in-person sessions. As you can see, there is no right or wrong way to do this! If you choose to do both, how would you manage your time and sessions?
How many hours and clients would you like each week? How many weeks would you like to work each year?
Many new therapists in private practice start off part-time. This is a great option because many clients who work 9-5 jobs will most likely book their sessions during out-of-office hours. This means it is possible to juggle both. This will also give you a chance to build your business and client base, without struggling with income. From this, you can decide how many hours you want to work and find flexible options for renting therapy office hours.
I have experienced and seen many therapists start their therapy business by seeing their clients only after work and/or during the weekends. For example: As I work in the city of London where most of my clients work in offices, I was able to work part-time in the beginning and see my clients in the same area in a local therapy clinic after we finished our office job. This is a common thing to see in many cities.
If you are working as a full-time therapist in private practice, consider how many clients you want to see during the week. Along with this, I always recommend thinking about your own energy management – How many clients do you feel is a good number for you and your health? I feel that this is important to think about so we can gain better awareness of how we work. Some therapists can see 5 clients back-to-back and it does not affect their energy levels – Yet others will prefer to either space out their clients throughout the day or work with fewer clients to keep their energy levels up. This is a topic that often is discussed when I speak to therapists who are experiencing burn-out… so as prevention, this is a good Self-care practice to have in our business.
WRITE THIS DOWN – How many clients would you like to see each week? How many weeks in a year would you like to work?
How much would you like to earn each year?
Let’s set some goals! How much would your ideal number be? When you are thinking about this number, please take into account everything that we already reflected on so far because it will affect your perfect amount. For example: Working part-time will often bring you less than if you are full-time. According to what you have chosen to do in your ideal week, what would be a realistic good number to aim for?
WRITE THIS DOWN – How much would you like to earn each year (pre-tax)?
Calculate your yearly expenses
How much will you spend on your business each year?
Let us start off with your monthly expenses for your therapy business. Here are some areas to think about when you are calculating this. Add more if needed.
- Liability insurance: How much does this cost each month? This is important to have in private practice.
- Rent and office costs: If you are renting a therapy office space, how much are you paying each month?
- Equipment and travel costs: If you spend money to travel to your therapy office, how much does this cost each month? If you work online, how much does your equipment cost to keep your business running (for example: your monthly internet connection cost etc).
- Practice Management: How much does it cost to organise and book your clients? This can be subscriptions to online platforms for booking clients and scheduling, email domains, online therapy platforms, software etc.
- Marketing: What do you pay as part of your business marketing? This can include advertising on Google Ads or social media, your own website, joining professional memberships and online therapist directories.
- CEUs and professional education: Continuing education courses and conferences you attend to further your knowledge, gain new skills, and continue holding your license. You may also include supervision or peer supervision groups in this category.
WRITE THIS DOWN – Add each of the monthly costs up and multiply by 12 to give you the yearly expenses number.
Calculate your hourly rate
Now that we have explored the main factors and areas to consider when we are planning and developing our therapy business, we can start to put these figures into place. Let’s work out your hourly rate – We are going to use an equation for this, with the figures you have written down from our previous points. This equation will help us see what goals we can set for our therapy business.
The Fee Equation:
(Ideal Yearly Income + Yearly Expenses) ÷ Number of Yearly Work Weeks ÷ Number of Weekly Clients
This looks complicated… Let’s put this into action. So here is an example so you can see what this could look like. Use this example to add your own figures from above to get an idea of what you can charge as an hourly fee.
Ideal Yearly Pre-tax Income: $100,000
Yearly Expenses: $10,000
Ideal Number Of Clients Per Week: 20 clients
Total Yearly Work Weeks: 45
Let’s use these numbers in our equation…
$100,000 + $10,000 = $110,000
÷ Divided by 45 = $2444 (rounded up)
÷ Divided by 20 = $122 (rounded up)
In this example, you need to average making $122 per session based on the other parameters set. This will give you the goal you wish to earn in one year. Feel free to play around with your own numbers in this equation and try them out until you reach a goal that feels good for you.
Using this equation to think about your profit and number of clients – If we want to use this equation to see how many clients we need each week to turn a profit, we can extend it like this…
The equation for client number and profit:
$10,000 (yearly expenses) ÷ Divided by 45 (total yearly work weeks) = $222.22
÷ Divided by $122 (hourly rate) = 1.82
Therefore, if you expect to be paying $10,000 of yearly expenses for your therapy business and you work 45 weeks per year averaging $122 per session, then you will already turn a profit if you average at least 2 clients per week. When you see it like this, it sounds good!
Know your worth! This is something that I often hear as advice when it comes to pricing and charging for our services. Too often, many therapists undercharge and don’t value what they are offering. I hope that this post helps you explore different possibilities to live and expand your business with confidence.
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