I think you’re probably setting your fees wrong.
Sound harsh? I talk to therapists every day who are working hard, doing excellent work...and not making a good living. The process you use to set your fees is one big factor determining whether you’ll make enough money to feel some financial ease or make just enough to scrape by.
When you use the wrong process to set your fees, you’re likely to feel resentful and discouraged about how hard you work and how little you take home.
I kind of wish I could reach back into the past and tell the me of 15 years ago to read this article. But here I am now, sharing it with you, and that’s good enough for me.
Spoiler alert: I don’t know what your fees should be. Only you can know that. I do have a pretty great step-by step-process to help you figure it out.
How most therapists set their fees
Is this you?
You set a “full fee.” It’s based on a combination of factors including:
the going rate in your area (or what you think it is)
the biggest number you can imagine actually asking for
the number of years of experience you have (and what you think that’s worth)
the value you place on your services
the amount you are comfortable paying for your own therapy
The amount you think your colleagues would feel comfortable with you charging
The amount you think your current clients can afford
You also do a little math and decide that you could make enough if you multiply this full fee number by the number of clients you’ll be seeing.
If that’s the process you use, you’re not setting this full fee high enough. You’re setting yourself up to barely scrape by.
I’ll tell you why this process for setting your fee is failing you. Then I'll offer you a freebie, instructions and a video to walk you through my step-by-step process for setting your fees.
Why is the process so many therapists use wrong?
The process above is missing some important pieces, so it inevitably leads to you make too little.
I’ll go over 3 big pieces you should take into account next time when you set your fees.
Missing piece #1: When you set your fees, you didn't accurately account for your sliding scale.
If you don’t have a sliding scale, you can skip this missing piece.
Sliding scales are great! I use one in my own therapy practice. Most therapists set them up badly.
Most therapists set their full fee using the factors I named above, and then make adjustments down from there on a case-by-case basis.
You might think that the fee at the bottom of your sliding scale is the problem. I think your problem is more likely the fee at the top of your sliding scale, your full fee.
Huh?
Your full fee is the problem because you didn’t set it high enough. You need to set the fee at the TOP of the scale high enough that your average fee gives you financial ease.
With a sliding scale, fees only go down from your full fee. If you set your fee at 150, your next client isn’t going to say, “That feels too low for me. I’d like to pay $200 because my income is really robust right now and I have a trust fund.” It would be unethical for you to accept more money even if they said it.
You need to set your full fee high enough that every time you adjust your fee, you’re confident that your average fee will work for you. Otherwise your only way to change your average fee is to slide less.
Getting rid of your sliding scale all together is a valid choice, but it’s kind of a sad choice.
Wouldn’t you rather set your full fee high enough that you could easily afford to hold on to some lower fee spots? Wouldn’t you like to be able to slide significantly for a client you’d love to work with who has very little income?
Missing piece #2: You underestimated the interruptions in your schedule.
You calculated your fee based on a full schedule. A full schedule is not how life works all the time.
Cancellations, attrition, vacations, illnesses and other interruptions all impact the number of sessions you have.
Almost all therapists UNDERESTIMATE how many interruptions happen in their schedules.
When you underestimate how many times you DON’T see all of your clients in a given week, you’re always financially stressed about cancellations and attrition. You’re always a bit hesitant to take time off. When you add up your income, it falls a little short of what you hoped.
When I ask a therapist how many sessions they have per week, they usually tell me the number of sessions they have regularly scheduled.
I suggest that you track your actual number of sessions. It’s easy. You can do it now. Just take the past 3 months, add up the number of sessions that actually happened, and divide by the number of weeks.
If your practice isn’t full yet, get realistic about how many sessions you will feel comfortable having each week, taking all of those inevitable interruptions into account.
You can also adjust your office policies and enforce them to decrease how much these interruptions hurt your business.
By the way, you need to take vacation and sick time. It isn’t actually something to be proud of if you never take a sick day. We therapists need self-care just like all other humans.
Missing piece #3: You're not allowing for savings
Savings? That’s something we therapists often leave out. When I was setting my fees early on, I don’t think I even used the word savings. Savings is the path to financial ease in your business and in your personal life.
You probably left out or underestimated the savings you need when you set your fee.
Let’s start with personal savings. You deserve to put away some money before you pay your bills.
If “savings” is too alien a word, try these instead:
Unexpected bill
Retirement
Unexpected health problems
Time with your family
Buying your next car with cash
Mortgage payoff
Rent increase
Caring for an aging parent
Travel
Then there’s business savings. Yep, you deserve to build savings for your business too. Occasional business costs come up that aren’t in your regular business budget. When you add up your anticipated business expenses, it’s easy to forget stuff. Unexpected expenses and opportunities come up now and then.
Here are a few examples:
You need a new sofa for your office.
A once in a lifetime training is happening in your town.
Your lease is not renewed so you need a new office deposit.
A bill you forgot about came in the mail.
Your website needs an overhaul.
If you add them all up, these occasional costs actually come up often. Sometimes a bunch of them happen at once. Imagine having that money already sitting in your business savings account before those expenses come up. Ah, peace!
It’s time to get ready to set your fees in a new way. Get my step-by-step instructions below. You'll get a video and worksheet walking you through the simple process.
